so I don't know what happened but almost 8 hours ago I put a custom picture from the settings page in Windows 10 and then turned off the VM. now I logged in and I see my Azure Active Directory picture is showing up in the Windows settings!
another thing that happens is that my windows 10 is now automatically activated using my organization's license (Windows 10 business subscription). it wasn't activated 8 hours ago.
so I suspect 2 things: either the activation was required for the picture to show up or I just had to wait..