Just wanted to report as a system admin from another organization that the changes introduced in KB5124008 concerning Machine Identity Isolation in Credential Guard breaks Windows 11 25H2 domain trust in the same manner as thoroughly detailed by the OP, Alex Turner, as well as all others who have detailed NTLM/NETLOGON failures on this thread.
This was rolled out to a pilot sample rather our entire organization of only ~50 or so machines on the evening of Thursday, 9/10/2026, but every machine that installed KB5124008 and completed the post-installation reboot had NETLOGON failures and had to have their domain trust repaired by the following Friday morning (9/11/26).
We've been following this thread since then and can also confirm that the MachineIdentiyIsolation value in the registry was set to 2 post-update (Enabled with enforcement), and disabling the feature (which corresponds to a value of 0) has proven to enable our machines to stop discarding the machine account LSA secret without having to uninstall the security patch. Some confusing aspects about this subject, however:
- While we had a GPO configured for our workstations to enable Virtualization Based Security along with Credential Guard, we never configured Machine Identity Isolation in the policy, and while I don't even recall the setting when I was last in the policy months ago, I know for a fact it was left as "Not Configured", and certainly not "Enabled WITH ENFORCEMENT", as we made sure not to enable any of the enforcement or UEFI "lockout" options on the VBS setting. While it makes sense that if left to "Not Configured", the patch could have enabled this setting to the '2' toggle (with enforcement) and introduced this behavior without the GPO configured to enforce otherwise, we're struggling to grasp how our GPO could have been modified to reflect this configuration when we're certain we never enabled it, and can confirm when we last modified the GPO and what we enabled it to do. The only thing I can conceive that might be of significance is updating the latest ADMX templates on our DC's several weeks ago to keep them current, and somehow the updated settings schema imposes a default option for certain items where previous set to "Not Configured", but this is a complete guess.
I changed our GPO to set this to "Disabled" so it would effectively make the registry value mentioned correspond to 0 on all of our machines (so any change to the MachineIdentityIsolation setting/value in our case was done by setting the GPO to Disabled, not direct registry modification)
- The other strange aspect about this registry key is that, while the value changed to 0 after applying the GPO with the "Disabled" setting as expected, the two machines we uninstalled this patch from and rebooted still reflect a registry value of '2'! They're receiving the same GPO that's configuring the value to be 0 on all other machines, but this value is remaining '2' exclusively on the machines that KB5124008 has been removed from, almost as if this setting isn't recognized if on earlier builds of Windows than this patch and it's just being left in place and not really having any effect.
Somehow, I was able to deploy this workaround via GPO and repair all of the affected machines remotely without ever having to unjoin/rejoin them to the domain or reboot them. For anyone else who might be in the same situation, this is essentially what we were able to do to repair the machines with the patch left installed using automation:
- Set a Group Policy configuration to define the "Machine Identity Isolation" setting inside of the "Virtualization Based Security" setting under Computer Configuration>Policies>Administrative Templates>System>Device Guard as 'Disabled'.
- Assuming you're able to use administrative credentials to run WinRM/PowerShell Remoting commands to the machines (in our case, we were, which is strange considering the domain trust was failing, but somehow NTLM was authenticating for single hop, client-to-client connections), run the following against the affected machines:
Invoke-Command -ComputerName ($yourListOfMachines) -Credential $credWithAdminAccess -ScriptBlock {
# Run a GPUpdate to ensure that the GPO change to disable Machine Identity Isolation takes effect
gpudate /force
# Reset the machine's secure LSA password (this command fails until MachineIdentityIsolation is disabled)
Reset-ComputerMachinePassword -Server $yourDomainController -Credential $using:credWithAdminAccess
# Repair the computer secure channel (with the updated LSA-stored machine password in place
Test-ComputerSecureChannel -Server $yourDomainController -Credential $using:credWithAdminAccess -Repair
}
- We've found that using "Test-ComputerSecureChannel" to merely check if the domain trust is fixed to be unreliable, as after repairing the trust on all machines, we would randomly see some machines come back as false when checking again, then checking again right after, those machines would report "True" and some different machines would report "False". This seems to be erratic behavior inherent to the PowerShell cmdlet.
To accurately verify no secure channel issues exist, I ran the nltest.exe /sc_verify:$yourDomainController command to ensure I got back a success.
Why a reboot wasn't necessary for the GPO change to the MachineIdentityIsolation setting to be effective, I don't know, and why internal, machine-to-machine authentication seemed to work most of the time to enable us to remotely issue these commands, I also don't know, but this has at least restored order to the machines we have installed the patch on without having to remove it.
All of this being done, we have a case opened with Microsoft on it, giving them event logs detailing the before and after states from the patch of the Netlogon-Security component, as well as the results of altering this Credential Guard feature and how it seems related to the issue at hand. We're still waiting to hear back from them or even see them add this to their known issues on the patch's official page. Despite finding a "workaround" (that we don't fully understand or know what the long-term consequence of using could be), we have paused patch deployment to further PC's.
Thanks to everyone else who has shared the information found here, and I hope our findings will be helpful to someone as well until Microsoft finally confirms this.