So I had the same exact issue. Stuck in a loop with MSFS20 asking me to login to my account, only to have it give a connection error. Tried it many times and get the same error as OP over and over again. I found the instructions for uninstalling XBox app and Microsoft store etc etc. No way, I'm not about to start uninstalling the heart of Windows 10 in attempt to fix one application. I felt something more local to the app must be going on. Especially since I did not set a data limit on my connection.
I found this little tidbit of info and gave it a go.
Step 1: Close Microsoft Flight Simulator and navigate to the UserCfg.opt file that you can find at the following location by default:
C:\Users\YourUsername\AppData\Local\Packages\Microsoft.FlightSimulator_8wekyb3d8bbwe\LocalCache
Step 2: Open the UserCFG.opt file with Notepad, scroll down to the bottom of the page, and delete the following line
"C:\Users\YourUsername\AppData\Local\Packages\Microsoft.FlightSimulator_8wekyb3d8bbwe\LocalCache\Packages"
Step 3: Relaunch the Microsoft Flight Simulator
Step 4: Sign in with the Microsoft account used to purchase Microsoft Flight Simulator
Step 5: The "Set Up Your Experience" screen will appear again
Step 6: Make sure that the installation path points to the folder where the packages are installed
The next time I started MSFS, I indeed was prompted to confirm the install path. Since I didn't actually change it, I was able to accept the default. The installation manager took a little while going through and confirming the license on my installed components, but once it was done, I clicked "continue" and the sim started right up. Wahoo!
Hope this helps someone.
