I have pretty much the same problem, except Windows Hello says it does not recognize my face and I must log in using PIN or password. When I go to Sign In Options in Accounts and click on setup under Face Recognition, it asks for my PIN, then...nothing. If I delete my PIN, then go through setting up face recognition, the camera comes on, scans my face, then requires me to set up a PIN. After it completes though, it does not save - as though I never started the process at all. So, I know the camera works, I know a PIN works, they just don't work together when setting up Windows Hello.
I contacted HP support. They confirmed my camera is working properly and referred me to Microsoft support. MS support accessed my computer remotely, went through a bunch of options, running Windows Update, changing the way services start, checking the HP support assistant for updates, and creating new users to try face recognition. None of that worked. Next they ran Windows 10 Update Assistant, which downloaded a fresh copy of Windows (Home) to my computer. It ran, setting up Windows all over again. I was assured by the tech this would fix the issue, but it did not.
Rolling back the camera driver did not work. In Device Manager, the camera is listed as HP IR Camera. Details show it as Realtek DMFT - IR, with the Device Instance Path as USB\VID_05C8&PID_0801&MI_00\6&503E3DC&0&0000. Usually the camera is listed in the Cameras category, along with HP TrueVision HD. But, after rolling back the driver, the HP IR Camera moves to an Imaging Devices category.
At this point, I've basically given up. I'm not new to computer hardware nor Windows operating systems. This just doesn't seem to have a resolution.
One other thing...when I started with Microsoft Support, the tech told me this issue was a Set Up, Install, Update issue - and there would be no charge for support - presumably because it worked before the Fall Creators update. During the process, I lost internet connection (thanks Suddenlink!!) and had to reconnect with MS Support after my internet was back up. On reconnecting with MS, another tech told me there would be a $149 charge, differing from the no charge Set Up, Install, Update reason I was told at first. So, my advice is, if you contact Microsoft, tell them it was working before the update and now doesn't. It seems that has bearing on how they classify it and proceed.
Regards,
Laner61