Yes, creating the Live account automatically is against TOS for the Live service thus off topic here. But I think what you are looking for is this:
# Create new local Admin user for script purposes
$Computer = [ADSI]"WinNT://$Env:COMPUTERNAME,Computer"
$LocalAdmin = $Computer.Create("User", "LocalAdmin")
$LocalAdmin.FullName = "Local Admin by Powershell"
$LocalAdmin.UserFlags = 64 + 65536 # ADS_UF_PASSWD_CANT_CHANGE + ADS_UF_DONT_EXPIRE_PASSWD
Or you can use the old method:
Another alternative is the old school NET USER commands:
NET USER username "password" /ADD
OK - you can't set all the options but it's a lot less convoluted for simple user creation & easy to script up in Powershell.
NET LOCALGROUP "group" "user" /add to set group membership.