Microsoft has released a new Windows 10 2004 preview cumulative update that fixes a bug that breaks the Windows Subsystem for Linux 2 (WSL 2) Microsoft has fixed this bug, and users can use the WSL 2 Linux distributions again. The fix will be rolled into next week’s October 2020 Patch Tuesday updates. For those affected, you will instead need to launch Windows Update and then click on ‘View optional updates,’ as shown below. The KB4577063 update is an optional update that will not be automatically installed.
Source: https://www.bleepingcomputer.com/news/microsoft/microsoft-fixes-wsl-2-breaking-bug-in-new-windows-10-update/