Facepalm! Windows 10 1607 Aniversary Update "Defer Updates" setting is back to front.
Here's another major flaw too.
Could it be someone at Microsoft got their wording/digital states: 1 and 0 (true and false) mixed up? Seems so.
For those people running Windows 10 1607 AU wondering why they haven't been offered Windows 10 1703 Creators Update, it turns out:
Windows Settings->Update and security->Advanced Options->Defer Feature updates
This toggle switch appears to be operating back to front. (This might sound odd that no one has noticed this before, but it does appear to be the case)
(Check first that on your system the toggle is off (i.e. no tick in the box), the system is set "not to defer updates")
Select 'Defer Feature updates' (i.e place a tick in the box) then go back and check for updates, it then finds the update. (The switch operation seems to be the wrong way round).
If you break the 1703 update process (to test) i.e. don't complete the update at this point (you'll get a failed update in your update history though), then toggle the switch off again (i.e. remove the tick in the box to 'Defer Feature updates'), when you check for updates again the 1703 update option disappears.
Which seems to prove the switch is working opposite way to the way it should. Well done Microsoft.
(Seems crazy to think a Company the size of Microsoft could make such a simple fundamental mistake, which has such massive consequences to the roll out of new versions of the Windows 10 OS, but these things happen).
If this is the reason, there are so many not getting this update, that is highly embarrassing for MS, an 'egg on face' moment, especially given they've been quite coy regards the latest figures for number of active installs of Windows 10.
MS are not going to get many 1703 upgrades in the interim before 1709, if they have all been 'deferred'. But maybe MS saw it as a way of dealing with complaints of 'upgrade overload', to give users/consumers a break.