In the end, it turns out it was not accepting expired certs -- there was another auth method superseding the certs -- but the behaviour I saw in this case was not unusual to encounter.
Microsoft has many excellent engineers, even in security. But decades of culture rot take longer than a few years to fix, and a lot of old-timer Microsofties have this "not my problem" viewpoint that can lead to major security risks. No doubt, the way Microsoft has handled this year's layoffs -- staggered, leaving people in the lurch and in serious stress for months on end -- has wiped out much of the progress they've made under Satya.
tl;dr I'm not surprised by (a) Microsoft having breaches and (b) Microsoft not dealing with security issues in a timely manner.