I've had multiple live chats with support team members and they all confirmed this is a known issue and will likely be fixed on the next windows cumulative update.
I have my doubts over how true that is, but I'm hoping this would indeed be the case and we won't reach a 4th month without a functioning update.
Nevermind then, I contacted support again to double check and this time they told me this is not a known issue, so that was a lie. That's unfortunate.
It seems we have no other option but try to solve this ourselves. I am assuming I am not the only one who is not happy to clean reinstall windows for the issue to possibly just come back after restoring data.
Currently, I've seen a few people had luck fixing this by uninstalling a specific xbox game, could the person who realized this possibly elaborate on how they figured this out, so others can find their specific problematic app?
Also, would be happy to know if anyone figured out something else in the meantime.
By the way, if anyone created a Feedback Hub ticket regarding this, would probably be a good idea to share it here so people who experience the problem upvote it.