This is what I wrote about previously and why I think only a subset of users is experiencing this problem. Many or most users have exchange servers at the same domain as the domain on their email address. Therefore, they will not experience this problem
which seems limited to exchange server accounts where the email address domain is different from the domain of the exchange server.
Thinking about this further, this may be a security feature implemented to assure that credentials are not switched to bogus servers, but I'm not convinced that this is the case. It is also true that desktop installations do not see this problem as much
as laptops. Further, it seems to be restricted to "wild" access, as the frequency of password requests diminishes when I'm connected via a VPN. Disconnecting from the VPN causes the password prompts to return.
This issue is clearly a bug in password and username construction that is passed to keychain, and then later accessed for re-authentication. The problem is Keychain will not accept any changes to the Keychain entry. Outlook seems to recognized that it
has changed since last update and refuses it, only to make another entry with the bogus domain name again. Again, this seems like a security check to make sure that the password has not been altered by other programs. That would lead me to believe that Outlook
is also storing some information about the keychain entry in another location in order to check on the credential authenticity before using it. This makes the fix more complicated because I have no idea where it would save this information.
This does not seem like a difficult problem to solve. They just need to remove the erroneous code that supplants the domain on the user entry of username and password. It shouldn't be doing that in the first place - never used to.