On your system, can you log out instead of shutting your system down to change accounts?
As far as your wife's system, in one of the earlier builds, if you signed out of a Microsoft account and into a Local account, it would not let you sign back into a Microsoft account. It showed you in a Local account but would give some message and ask you to use a different user. This latest build may have brought that problem back.
The fact both of you seem to be having some type of password problem might mean there was some type of overlap in your two Microsoft accounts. Can you both you and your wife sign into your Microsoft's account online, such as your OneDrive Account.