[Solved] - the issue has to do with Microsoft Two Steps security process.
To solve the problem, go to your account on a internet explorer, click on your name (top right) and select the Account Configuration, now go to security and privacy, additional configuration options, deactivate two steps verification process. Place your
password and BAM...
Add the outlook account on your phone (settings, mail accounts, add an account, outlook, user, password, add)...
Two steps verification process is a good way to protect your account, so if you want to activate it again, simply go to the same web page in which you deactivated. Now choose activate, it will ask you if you have an iPhone sync with your account, simply
select iPhone link and it will provide you with a password to synchronize your phone... use this password when your phone asks for it... done
Your account is protected, your phone is working normally and your passwords remains is the same.
Good luck mates :)