The last time I tried to do this it was impossible to sign into Office or Xbox on that same PC without logging into a Microsoft Account which subsequently takes over your local login. No way around it other than to not use those apps at all or only running office through a browser. It went like:
Install flight simulator on a Win10 PC with local login only and launch -> sign into an xbox account -> after you enter your name and password, you get a dialog box where you have to agree to sign your Microsoft Account on that PC with two dark pattern options that lead to the same result.
I couldn't find any combination of group policy editor, registry, and services.msc around it. You can either close it and lose access to the game you just paid for, or proceed and then you get your account signed into email and a bunch of other crap you dont want and have to spend hours getting rid of all traces of that account in your system(but it's never 100% gone). Only way to bypass it is to buy the game through Steam.
Between MacOs Linux and Microsoft, Microsoft has the last respect for you as a user and nobody should use it if they don't have to.
