I have the same issue. I am using Server 2019. In early 5.0 builds, this was not an issue. Now, I am getting this message too. My system is upto date according to windows update.
When I run DxDiag.exe it clearly shows that I have DirectX 12 Installed.
Unreal Engine Demo Valley of the Ancient 5.0EA runs perfectly.
UE5 refuses to run Valley of the Ancient in 5.1 due to this error. Clearly, 5.1 is not correctly reporting my DirectX 12 status and now I can’t really use anything in 5.x other than early release without this bug.
checking windows update only displays that all is up to date. If there is a download that will fix this… I am interested.
This big is preventing me from taking my build from 4.27 to 5.x.