1
Currently when you format or reset your PC, when you create the user profile, Windows automatically names the user folder with the first 5 characters of your name or Email address.
Microsoft indicate it is not safe to try to change the name on the user folder, because it is referenced in so many locations in the registry and changing the name on the user account folder may corrupt the user profile.
2
The best option is to create a new user account as a local account by not adding the Microsoft account details, then the user folder should be named correctly, you can then add the Microsoft account details.
3
Also, Microsoft have finally realized this user folder naming convention is a problem and there is an update being released soon where we will be able to provide a specific name for the user folder when we are creating a user after formatting or resetting a PC.