If you go in Extra settings and then tap on motion data, nothing is showing up. Firing up Microsoft Health does not give the option to use phone motion data as it used to do. And finally, like you, it is listed in stores updates with the error message. When I went from 10581 to 10586, I have done a hard reset right after the upgrade.
Ok...I have a few possibilities that can explain why motion data is broken. I hard reset the phone again and it did not fix it.
Here is what I have done to fix it:
1. I reverted back to 8.1
2. Once on 8.1, I let all the apps to update.
3. I installed Windows Insider and upgraded to 10 build 10586.11
4. I then let all the apps to upgrade before doing anything else.
5. I still haven't hard reset and the OS is buttery smooth on my 640XL.
So I think, once upgraded to 10, you have to let the phone sit for a while. I believe there are migration tasks going in the background. The first time, when the phone booted, I hard reset right away so I believe the hard reset occured before those migration tasks finished so the motion data broke. Other possibility is this is a bug upgrading from 10581 to 10586 so you have to revert back to 8.1 to upgrade properly...just my guess