This issue is not considered to be a bug with
chrony, so the
chrony package on RHEL 7.4 and above will exhibit the same behaviour.
The root cause of the problem is that
chrony considers the time reported by the Windows Server to be inaccurate. According to the this solution article, the problem occurs with Windows versions earlier than Server 2016 that use their local clock as the reference.
This gap exists because the Windows Time service was originally created to ensure that systems using Active Directory could be kept in sync with a variation of up to 5 minutes. It was not meant to be used as a fully-fledged NTP solution - source. Windows Server 2016 includes updates to support high-accuracy timekeeping, but the default settings remain the same.
The solution to the problem is to make the time source more accurate. If you have Windows Server 2016 or later, you could look into the high-accuracy timekeeping settings. Otherwise, you could have the Windows Server connect to a different NTP server for synchronization instead of using its local clock.