See this post for the resolution to the issue. This fixed it on my Dell E5470.
https://social.technet.microsoft.com/Forums/en-US/b975932a-b50b-4759-b43a-c94854c6da83/cant-enable-windows-hello-with-fresh-install-of-anniversity-upgrade-on-domain-account?forum=win10itprosetup
Apparently 1607 requires this registry key setting to enable PIN login on domain joined machines:
[HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\System] "AllowDomainPINLogon"=dword:00000001
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