Hi, ssuresh137. Did you manage to set up the MS account successfully? If no, please try to set up the account under Settings > Email+Accounts > Add an account > Outlook.
If you will be getting the same error, try turning off and then turning back on the Wi-Fi under Settings > Wi-Fi. While we understand that you don't have any issues browsing any websites via IE, etc, we suggest connecting the phone to another Wi-Fi network. If you have an active data connection, you may also use this and then try to set up your account again.