OK tested both possible scenarios.
First scenario: a Microsoft account user with profile name
ABCDE exists, trying to create a new local user
ABCDE fails, cause being that this profile name already exists:
Not possible.
Second scenario: a local account user
ABCDE exists, trying to create a new Microsoft account user
ABCDE@AnEmail.com. No issues in creating new Microsoft account user but because profile name
ABCDE already exists, the new Microsoft account gets profile name
ABCDE_xxxxxxx where
xxxxxxx is a seemingly random 7 character string which apparently nothing to do with computer name (it would have been more logical if this new profile name had been ABCDE_PC-Name!):
Works, with a strange profile name.
Conclusion: create the local account first, then you can create a Microsoft account with same name although the profile gets a weird name. Other way around it does not (logically!) work, a local account with same profile name than an existing user account regardless if existing user is local or Microsoft account can't be done.
Tested on a Hyper-V VM with Windows 10 build 15014 I just set up for this.
Kari