I am using a Nintendo Switch Lite, but have same problem with normal Switch. After some months where there was no problem now the connection with the Microsoft account does not work anymore. Either I cannot connect at all or, after a few second, the system disconnect me saying "Etwas ist Schlief gelaufen" (German for: something went wrong). No error code whatsover is shown. I cancelled the Cache of the Switch but did not help. I also tried to restart game and Switch with no effect.