this location isn't setup for installing games xbox app

Hi and thanks for reaching Microsoft Xbox gamer's community. My name is Josef.
I'm an Independent Advisor and a Microsoft Xbox user like you.

Hope you're doing great today despite this MIKEWRITESSPORT

Just to confirm, is the drive that you want to use formatted as NTFS?
Double check this opening File explorer > my computer > Right-click on the drive > properties

If your drive is already formatted as NTFS, could you try re-formatting it and selecting the drive as where new content is saved via Windows Settings > System > Storage

If you're not able to format it, try in this case creating a new NTFS partition and select it to save new content.
In case you need it, follow this tutorial in order to do it
https://www.diskpart.com/articles/partition-ntf...

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Tried the local admin creation. Rebooted and logged in with the new local admin ID. Installed XBox app and went to attempt to download a game. Same error at the drive selection screen.

Used the SFC scan on both drives. No errors.

I see, I think that would be great consider doing an in-place upgrade:
https://answers.microsoft.com/en-us/windows/for...

After that, give it a new try

I see... Let's try something different
Please try creating a new local administrator user in your PC and try from there
https://support.microsoft.com/en-us/windows/cre...

If that doesn't work, may I know if you already tried running the SFC tool?
https://answers.microsoft.com/en-us/windows/for...

And just to confirm, are you not using an insider build and are you not part of the windows gaming program available in the insider hub app?

All windows updates are up to date.

I can't partition this drive any further.

However, with idea of a fresh drive. I did completely format a separate drive with NTFS. I added the drive to my PC and then went to settings / storage and set the new drive G: as the "Where new apps are installed" drive. Windows created a Program Files and WindowsApps folder as expected.

I then opened up the XBox App and went to install a game. At first the new drive appeared selectable. However, as soon as I selected the new drive it immediately got the orange triangle error with "this location isn't setup for installing games" So the issue still persists.