Xbox "Screenshot uploaded" notification looked like a demon had possessed my Xbox, what could the reason be?

Speaking as an ex-Microsoft employee (I worked on Windows), I saw a lot of this, because it's an intentional feature for internal users. We called it "pseudo-localization": it's basically an automatically generated "language" that we used to make sure every piece of text in the program is accessible to the translation team, without going through the expense of actually doing the translations, or the frustration of trying to use our computers in a language we don't understand. The generator just goes through all the text strings (that it can reach), and converts them by starting with the original English text, replacing each letter with a randomly chosen "demon-possessed" equivalent, and then adding about 50-60% extra nonsense (to make sure it still fits in languages like German that tend to produce longer text). If we ever see some text that's still in normal English (because it wasn't accessible by the translation system), or if something doesn't fit or looks terrible, we call up the team responsible and tell them to fix it.

Obviously this isn't supposed to be seen by external users, but it looks like there was some kind of bug and your Xbox temporarily thought it was in this "pseudo-locale". I agree, it's pretty funny to see!

It was just a bug and the update has fixed it.