Unable to get password for Instance launched from AMI obtained from an instance after being shutdown from SysprepInstance.ps1 for AWS Windows 2016 - powershell

Question

I read through how to work with Ec2Launch and SysPrep with AWS Windows 2016. Unlike 2008 R2 or 2012 R2, 2016 does not use the EC2ConfigService, instead it has EC2Launch and bunch of PowerShell scripts which takes care of the EC2ConfigService's job.
I launched a windows instance call it "I1" from the community AMI - Windows_Server-2016-English-Full-Base-2017.03.15
I Scheduled InitializeInstace.ps1, command - powershell.exe -Command "C:\ProgramData\Amazon\EC2-Windows\Launch\Scripts\InitializeInstance.ps1 –Schedule"
I ran SysprepInstance.ps1, command - powershell.exe -Command "C:\ProgramData\Amazon\EC2-Windows\Launch\Scripts\SysprepInstance.ps1"
The instance goes from running state to stop state.
I take an AMI of the instance and launch another Instance "I2".
There are two issues I am facing:
Issue 1 - I am not able to RDP into instance I1, I tried the password from the console by decrypting it with my pem file. But that password works fine before I have run this SysprepInstance.ps1, but after running that script I get the error Password incorrect.
Issue 2 - Once my Instance I2 has passed the status checks and is running, when I try to connect to it and retrieve the password from the console, I am not able to retrieve it, it gives me the error:
Please wait at least 4 minutes after launching an instance before trying to retrieve the auto-generated password.
In case of Windows 2008 R2 or 2012 R2, we would change the config.xml file of EC2ConfigService and make EC2SetPassword to enabled, but I'm not understanding what am I supposed to do with Windows 2016 with EC2Launch.
Edit 1: Including the contents of LaunchConfig.json
{
"setComputerName": false,
"setWallpaper": true,
"addDnsSuffixList": true,
"extendBootVolumeSize": true,
"adminPasswordType": "Random",
"adminPassword": ""
}