Online heroes stuck on "Taking longer than usual" and cannot enter game

Short description:
Online Heroes cannot enter the game. After selecting an Online Hero and pressing Play, the game remains indefinitely on the campfire loading screen with the message "Taking longer than usual...". Offline Heroes work normally.

This affects both my existing Online Hero and a newly created Online Hero. Multiple friends are also experiencing the same issue.

Steps to reproduce:

1. Launch Minecraft Dungeons II on Windows PC.

2. Select an Online Hero.

3. Press Play to enter the game.

4. Wait at the campfire loading screen.

Expected result:
The Online Hero successfully connects and enters the game.

Actual result:
The loading process never completes. After waiting, "Taking longer than usual..." appears and the Online Hero cannot enter the game. Pressing Cancel is the only way to leave the loading screen.

Additional information:

• Offline Heroes load and play normally.

• Both an existing Online Hero and a newly created Online Hero have the same problem.

• Other players/friends are experiencing the same issue.

• I tested a different internet connection/mobile hotspot with the same result.

• I repaired the Xbox app and ran the Gaming Services Repair Tool. System Diagnosis, Game Bar, Xbox Identity Provider, Xbox In-Game Experience, Xbox Authentication Manager, and Gaming Runtime Services all completed successfully.

• Reinstalling/repairing the game and signing out/in to Microsoft/Xbox services did not resolve the problem.

This appears to specifically affect loading/connecting Online Heroes after successful account sign-in. It is not a Microsoft account sign-in problem.