If I am right, fiddler use a root certificate to directly issue certificates to websites.
I earlier had a problem using Fiddler with an application. If I understood the problem correctly, the application was specifically checking if the server certificate was issue by an intermediate certificate (which was not the case here). So it was failing everytime with Fiddler.
I think it's also the proper way to do things. I don't know any public certificate provider who directly issue SSL certificates.
I think you are right.
It is windows 10 apps update server
I think it's very unlikely that this is what the application was actually checking; much more likely is that it contains a certificate pinning implementation and it's looking for a specific issuing certificate.
What is the application in question?