Hello,
I am having the exact same issue in a production environment running Citrix Virtual Apps and Desktops LTSR 1912 CU1 on Windows Server 2019 Standard Session Machines with latest OS updates and Office365 updates. Citrix Profile Management components are disabled and not used in the environment. Only FsLogix latest stable release is being used for user profile management.
We have tried to apply the following workarounds, to no avail: https://stefanos.cloud/blog/kb/how-to-resolve-error-group-policy-client-service-failed-the-logon-access-denied-in-citrix-and-fslogix-environments/.
The root cause of the issue seems to be that the local_username profiles created by FsLogix are not released properly at logoff (see attached screenshot). The file handles are kept open by the lsass.exe process. This is reflected in the FsLogix profile container logs (cannot delete C:\users\username folder. Access denied). We tried to manually close these handles with the SYSTEM user but afterwards the FsLogix service would not startup in the session machine.
We have opened a technical case with Microsoft which is being escalated. We really hope that Microsoft provides a release soon including a fix for this issue.
released, see attached screenshot.