Hi all! I've finally found a solution that fixes the xbox game pass app! All you need to do is download to the windows media creation tool from MS, run it and select "update this pc" it will basically reinstall windows without removing any of your apps/settings etc. it will take a little time to run but after I ran it and rebooted my PC, I opened the game pass app up and all my games were detected again and I could run and download new games again! No errors or endless cycles of asking me to install Gaming Services it just works again! I'm not sure what caused the issue or why it happened in the first place, but this fix 100% worked for me so I would suggest you guys give it a go for yourself.
I'm running Win10Pro so I'm not sure if this works for Win11, just give it a try! I still can't believe a multi-billion dollar company like MS can't make a solid and stable app and one that once broken requires you to completely reset your PC for it to work again?!