Make sure the Security Info is up to date first in your MS account online in case it wants to send a code to verify your account:
https://support.microsoft.com/en-us/help/12428/...
Click the link in Accounts > Your Info shown in your second screenshot under System Settings to "Sign in with a Microsoft Account instead"
Put in your MS Account email and let it convert to MS Account.
When it asks for the Local account password "one last time" be sure to put in the Local account pw and not the MS account password.