Except the passwords are synced with Google in Chrome, and it worked for years before the Windows 10 Update two updates ago. So clearly some functionality changed ...
Let's think about that: You allege that an update from Microsoft has, for months, interfered, either intentionally or unintentionally, with Chrome's ability to sync passwords. That's quite a charge. Why haven't we heard anything about this from Google?
In addition, you don't think those passwords are sent over the internet in plaintext? No, they are encrypted. So how would Microsoft be able to discern what transmissions from Chrome are passwords?
Moreover, Chrome is also my default browser, and I have all the Windows updates, and I have no trouble syncing.
In any case, if you worry that Microsoft and Google are mixing it up, try one of the third-party password managers. Microsoft can't prevent everyone from syncing passwords.