I was using the firmware that fixed the browser download issue - which I believe is from December 2017. This was most likely caused by an update to the host files on my ad blocker. As stated, I use a pi-hole for ad blocking. It pulls a bunch of restricted host files and the failure of the windows connectivity is stated on the FAQ:
https://github.com/pi-hole/pi-hole/wiki/FAQs
Since I don't have a windows machine, I've never had the issue and Kobo doesn't mention it's reaching out to other peoples sites. This ad blocker does what a lot of ad blockers do and use host files to deny certain domains. It only takes one source to add that URL to cause the failure, so I think it's unfair to blame them.
I decided to write up my story since I couldn't find an answer to what was going on myself and I had to debug the issue after following the recommended steps by Kobo, including a factory reset... Hopefully others find my post helpful and perhaps a little entertaining.
The software doesn't set the right hardware address in the device information when the Microsoft URL is unreachable, which complicates debugging any connectivity issue. I would consider using someone else's URL fine, if it was stated somewhere in the debug steps that this was happening. The hardware address being incorrectly reported has to be considered a poor decision or bug.