I'm having the same exact problem! Its been happening the same way since the game updated, though I keep getting responses filed under a bug for non-existent pre-existing Microsoft accounts. I'm sure they're both login issues but you're the one of the first people I've seen with the exact same error. It look's like they're monitoring issues on this thread: https://bugs.mojang.com/browse/MCPE-58464
I'm having the same exact problem! Its been happening the same way since the game updated, though I keep getting responses filed under a bug for non-existent pre-existing Microsoft accounts. I'm sure they're both login issues but you're the one of the first people I've seen with the exact same error. It look's like they're monitoring issues on this thread: https://bugs.mojang.com/browse/MCPE-58464