passkey removal not working

Part of the problem is that I am NOT prompted for my Microsoft password.

Sorry to hear it. If you've forgotten your passkey then you should contact phone support for help in resetting it. If you live in North America dial 1-800-469-9269

If you are referring to the guest key, check this out:
support.xbox.com/.../forgot-guest-key

A forgotten guest key can be reset by any adult as long as that person knows the password that they use to sign in to their Microsoft account on the console. The adult must be signed in on the console to reset the guest key.

You will either have to enter the correct password or try removing the passkey from the xbox to see if that works.

Hopefully this helps

To reset a passkey, you need to enter the wrong passkey in three times (if you have forgotten the passkey), and it will prompt you to enter you Microsoft account password instead. After completing this step, you can follow the steps below to either remove
or change your passkey:

Remove Your Passkey:

1. Press the Xbox button to open the guide.
2. Select System > Settings > Account.
3. Select Sign-in, security & passkey.
4. Select Delete my passkey.

Change Your Passkey:

Once your passkey has been removed, you can create a new one:

1. Press the Xbox button to open the guide.
2. Select System>Settings>Account.
3. Select Sign-in, security & passkey.
4. Select Create my passkey.
5. Enter a six-digit passkey, and then re-enter it to confirm.