I know that this is an old issue, but there are a lot of bad answers here.
If you are getting this error you are likely restricted by a domain (corporate/school) policy. As long as you have administrative rights on your system, do the following:
Hold down the Windows Key and the letter R to get a Run dialog.
Type gpedit.msc <enter>
On the left side browse to Computer Configuration\Administrative Templates\System\Logon
Double click option near the top on the right for "Turn on convenience PIN sign-in"
This will allow you to use a 6 digit pin. I don't see how to reduce it to a 4 digit.