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Machine Identity Isolation policies can reject valid credentials unless controllers meet the Server 2025 functional level

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Microsoft's September cavalcade of cockups continued with confirmation that something is amiss with Active Directory domain logins.

The issue , which affects Windows 11 versions 24H2, 25H2, and 26H1, was added to Microsoft's ever-lengthening list of known problems on September 16. It stems from changes to Machine Identity Isolation in the September 2026 security update (KB5124008).

The problem is that Credential Guard-protected machine accounts might lose their secure channel with an on-premises Active Directory domain. As a result, users might not be able to sign in with valid domain credentials and may see a message complaining the trust relationship between the device and domain.

The update enables Machine Identity Isolation but does not switch on enforcement directly. Instead, Windows begins honoring existing or policy-configured enforcement settings – a problem because the feature is supported only in environments connected to domain controllers running at Windows Server 2025 Domain Functional Level (DFL) or later.

"Any devices previously configured to use Machine Identity Isolation that are not connected to Windows Server 2025 domain controllers will experience this issue and will need to disable the feature," Microsoft said. "Offline sign-in using previously cached credentials might continue to work."

AD replication and AD services on the domain controllers are not affected.

Microsoft has provided a workaround, although it requires more than simply changing a setting. Administrators must disable Machine Identity Isolation using the same method by which it was enabled: Intune, Group Policy, or – to particular delight – the Windows Registry. Microsoft warns administrators to back up the registry and understand how to restore it before making changes.

After disabling the feature, administrators must restart the device and repair its secure channel using the Test-ComputerSecureChannel PowerShell command.

As for the longer term, Microsoft said: "We plan to resolve this issue in a future Windows update by temporarily preventing Machine Identity Isolation enforcement while improvements are made to the feature."

The feature has a useful purpose. Credential Guard-protected machine accounts allow machine account secrets to be protected by Credential Guard rather than stored in the registry.

The implementation has proved less straightforward.

The admission follows Microsoft's out-of-band update to address other problems introduced in the September update. ®

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