I have also been experiencing this issue.
I've just got it working again by signing out of the Microsoft account under settings.
I then signed in again to Xbox live via the remote connect feature. It was only at this point that it said the account had been blocked.
I unblocked the account via the on-screen instructions and completed the sign in process.
Once it said I had successfully logged in I had to wait a few seconds (be patient) for the switch to acknowledge the log in.
I could then see my friends again and join the ongoing Xbox one game.
Note the xbox live account had been explicitly created for Minecraft on the switch and had been used for no other purpose.
The account had been blocked due to suspicious activity, so there is an outside possibility that someone had tried to hack it.
Paul Blamire
I have also been experiencing this issue.
I've just got it working again by signing out of the Microsoft account under settings.
I then signed in again to Xbox live via the remote connect feature. It was only at this point that it said the account had been blocked.
I unblocked the account via the on-screen instructions and completed the sign in process.
Once it said I had successfully logged in I had to wait a few seconds (be patient) for the switch to acknowledge the log in.
I could then see my friends again and join the ongoing Xbox one game.
Note the xbox live account had been explicitly created for Minecraft on the switch and had been used for no other purpose.
The account had been blocked due to suspicious activity, so there is an outside possibility that someone had tried to hack it.