I am investigating further, but wanted to post in case this is a "known issue".
After upgrading my system to use 17.7, my AIP project is failing to successfully build a valid MSIX file. It builds a file, but signtool refuses to sign it claiming it is a unknown format.
I tried opening it in another MSIX tool which also doesn't like the output MSIX file. I was able to unpack it as a zip file sucessfully and the contents look reasonable to me at first glance. Files look like they are in place ([Content_Types], AppxManifest, AppXBlockMap, resources.pri, Registry.dat, etc) , and the manifest looks reasonable-ish (not yet sure at the detail level).
Obviously the AIP project was upgraded to the new 17.7 format. A diff between the 17.6 backup of that file and the 17.7 file show only a difference in the AI version at the top, a new package version and product code guids, and a small change in "shortnames" on a handful of the asset files - nothing extraordinary there.
If you have any ideas, I'd love to hear them.