[CAUTION TO ALL ENVIORNMENTS MAKING CHANGES TO Machine Identity Isolation]:
We just wanted to provide a big warning to anyone who has or is thinking about modifying the Machine Identity Isolation setting from either an "Enabled with Audit" or "Enabled with Enforcement" (value of 1 vs. 2 in the registry mentioned above) to "Disabled" (value of 0), as whether your machines have installed the latest patches or not, changing this setting from one of the two "On" states to "Disabled" will cause trust relationships to fail and secure channel for NETLOGON to break in the same way as those who received the patch whether you deployed the patch to them or not, and on every machine in your environment that you apply the change to.
Microsoft should have been FAR more conservative with their encouragement to environments to modify this setting if they didn't understand what it did, if they should have had any place to advised at all without a thorough inquiry beforehand, but please be warned, you might be running into major issues if you change Machine Identity Isolation in your environment from an on state of either "Enabled with audit" (value 1) or "with Enforcement" (value 2) to "Disabled" (value of 0).
Timeline of events:
- Thursday evening, 9/10/2026 - We deployed the original KB5124008 patch along with the month's .NET and 365 app updates to a pilot subset of our Windows 11 25H2 workstations.
- The next Friday morning, 9/11/2026 - We began noticing that all of our patched test machines were encountering missing machine account database secrets and failing trust with the domain. We attempted to run repairs on the secure channel, which would succeed, but only for about 10 minutes before breaking again.
- Mitigation - Eventually after noticing the pattern around Machine Identity Isolation, we set our Group Policy to ensure that Machine Identity Isolation was disabled on all workstations in advance of whatever final patch might be released that could still cause issues here. After applying this setting, we found we could finally run the Reset-ComputerMachinePassword cmdlet, which we couldn't run successfully until Machine Identity Isolation was disabled. Once this policy took effect, we ran the Reset-ComputerMachinePassword and Test-ComputerSecureChannel -Repair commands on all of our pilot machines that received the patch, and it appeared to hold at this point.
- We opened a case with Microsoft on Friday, and reported all of this, but heard no update for the rest of Friday.
- The following week, Monday, 9/14/2026. We had no issues all day. We also never proceeded to roll the patches out to any more machines either on Friday, so nothing else had changed since then.
- Then, Tuesday, 9/15/2026 - It appears that it took 4-5 days later before suddenly, yesterday, in the middle of the day, all of our workstations began losing secure channel connectivity to the domain gradually, one after the other, even those who had never been patched (which was most of them), and we spent the whole day fighting fires, trying to maintain remote WinRM authentication with all PC's to keep spamming automated repairs to them before they dropped entirely, resetting machine account LSA secrets and repairing secure channels on all machines over and over as users were reporting issues, until after about 90 minutes of this chaos, it slowly started to settle down and machines seemed to be keeping their secure channel with the domain after the machine password resets.
- Today, 9/16/2026 - Fingers crossed, everything has remained stable today, and we hope this doesn't suddenly occur in 4-5 days time again, though we believe that it was the initial transition from the Machine Identity Isolation policy from an "on" state to a disabled one that discarded the LSA secret, though we don't understand why that took almost 5 days for our machines to start being impacted by this and failing domain trust... Hopefully it was a one-time thing from changing this setting that won't occur again, other than offline machines that pop-up that didn't get the changes at the time since last week and might pop up here and there.
This was no doubt the results of having modified the Machine Identity Isolation setting from being on (though we never enabled it) to a disabled state, which Microsoft confirms will break secure channel trust without a 2025 DC on site, as no other DC's can properly receive the Credential Guard-stored secret from the TPM on client OS's, which is why a value of 1 or 2 fails trust relationship, because the legacy LSA authentication from NETLOGON with DC's won't work with Credential Guard's secret storage mechanism, and when this isolation setting is changed, it erases the LSA secret used to maintain normal domain trust and places the new one in the TPM that isn't understood or compatible with Server 2022 and lower DC's.
While we have everything seemingly stable at the moment (and never rolled any patches out to our other machines beyond the small test group last Friday), this has affected all machines, patch or not, so hopefully our repair attempts will be the last of this issue after changing this setting in our environment, though we're considering putting a 2025 DC in place just for the sake of having a site DC that can respond to clients should some other MS patch have this Credential Guard feature inadvertently enabled again in future changes - at least this should provide a potential alternative for authentication/self-healing for machines with identity isolation enabled instead of breaking secure channel trust with the domain until it can be manually repaired.
Oh, and although it's obvious at this point, the OOB patch released shortly after doesn't do anything to address this issue, which should be the most critical of all known issues...