What it means is that Microsoft now defaults to cloud based credentials on setup or when you add a user and makes it difficult to use local credentials. Once you are cloud based then you must have a network connection to be able to log in. If your network connection is slow connecting, the login may timeout and give you the error. That you were later able to login means the connection was made. You also get that error if not connected at all but that does not heal miraculously. This is for all cloud accounts. (you are supposed to be able to enter a password and gain access when offline but this does not always work).
Personally I set my machines up for local so that connection to a network is unnecessary but to do this during the account creation process you need to skip the large bold print and toward the bottom you will see something that says "I don't have this person's sign in information" and then "add user without Microsoft account". This should give you the old style create user page with name, password (twice) and hint. Once that is done you can make that account an admin. Or not.
Since you are able to get in at least for now, first thing I'd suggest is creation of an off-line admin account that is not used for anything so you always have access. Then I'd remove the admin rights from your cloud account and always work from there. If the UAC complains about something you know is safe and really, really want to do, then use the admin password for that only. I rarely need it.
Warning: periodically I get blurbs like Things are better with a M$ account...Sign in with your M$ account instead. No thank you.
BTW when trying to clean up an infected machine particiularly some of the new rootkits, the last thing you want to do is connect to a network so even if I have the MS password it doesn't work. It is often easier to pull the hardrive and work as a slave drive on another machine but the last one had a surface mount SSD. That took me a while.