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When installing ArcGIS Enterprise products, it is possible to list a domain user to run the Datastore, Server, or Portal services. If this format is specified (using the down level domain format - domain/user), the installation and future upgrades proceed as expected.
Additionally, it is possible to specify the UPN (email@example.com) format to run services via Microsoft Management Console > Services. However, upgrades of Enterprise products do not proceed as expected when using the UPN format.
This is a known limit. The following bugs have been logged regarding this behavior.
When using a domain account to run ArcGIS Enterprise, use the down level domain format - domain/user. The screenshot below shows the correct way the user account should be configured.
The screenshot below shows the configuration that is NOT recommended.
For more information on UPN and down level domain formats, please view the Microsoft documentation linked below in the Related Information section.