Outlook 2016 doesn't accept password or app password

You've really said this already, but it's not my experience as far as spam origin. Now I am repeating myself. :)

Anyway, we are happy with our move to Gmail, and will not be returning to Microsoft for this service largely (but not exclusively) as a result of this authentication issue over the past 2 weeks.

Cheers.

Every cloud hosting provider has major issues being used for spam. Azure, AWS, GCP, even Cloudflare. It is a game of whack-a-mole for them, knock one down, another pops up.

However as far as the very simple spammers who just open a free account with something like gmail, outlook, etc, I see far more from gmail than from outlook. Gmail users I know also receive far more than anyone I know using outlook, which may be related to Google's TOS basically allowing them to use and sell your information however they please.

We've been fully modern managed for a couple years now (Azure authentication/AD in the cloud) and I've never once had to provide a password for Outlook using Office 365 hosted email.

It has actually been quite convenient, instead of the company having to image a laptop before sending it out, it drop ships directly from the vendor with generic Win 10 or 11, you log in with your work credentials, and it images the machine and restores all your files from onedrive. Something gets corrupted or goes wrong, you just reset the laptop and it images again.

Our (and hopefully any) IT team tests the patches before rolling them out, and they have to defer some due to issues they find, mostly issues related to our own in-house applications that were impacted by a change made by the patch, but sometimes a bug with the patch itself that impacts windows or office.

Obviously MS has its problems (as we can see here), that's the result of cost cutting and outsourcing to generic developers in third world countries, like every other company is doing. I deal with it every day, the support staff for our critical applications has no idea how those applications work or how to fix them, and the staff changes every few weeks. As far as the company is concerned they're saving a lot of money. Of course when it leads to a breach or major outage that costs the company millions, that negates any savings, but C suite executives are very short sighted. Make the numbers look good for this quarter, worry about next quarter some other time. Worst case, take your golden parachute and go ruin some other company. In this case though, this is a free consumer product that is mostly being impacted. This has not impacted my work email at all (as it requires the use of outlook client on mobile, which uses modern auth), nor on my personal O365 using Outlook (only gmail android which doesn't support modern auth for activesynch).

Fact of the matter is, trying to integrate Google's offering with MS programs is just as difficult and buggy (if not more), and will never reach the same level of interoperability. MS has a stranglehold on the desktop market, just like Google (and to a lesser extent, Apple) has one on the phone market.

It is what it is, but I'm sure this issue is getting lower priority as the majority of the impact is free home users. Properly configured corporate users are not impacted.

For me it started with the password prompt the Windows Security prompt with no way to save the credentials. Not even by trying the suggested solution in the credential manager. Outlook 2013 ProPlus. The issue only applies to my Hotmail account and orher emails (IMAP) works fine. It's a tad strange that a Microsoft application doesn't support a Microsoft Email account..

Tried adding suggested regkeys, although I guess it shouldn't be necessary. Not working with 2 factor and app password either. Credential window still refuse to go away. It went from password needed, to connected ok from time to time.

Thought I might as well repair Office (even though I have all updates and all is fine except Outlook). Even removed my Hotmail account to add it from scratch. Now I can't even add the account. It refuses to accept the account and credentials... Not automatically, not using activesync. Nothing. Utterly useless..

UPDATE feb 7.

I tried adding my hotmail account to Outlook tonight by using the auto option under add account (Name, email, password x2). It went on as usual to the next screen where it tries to connect. The window flashes rapidly for a second or two and then the Windows Security auth window pops up as usual. When typing my password and select to keep it, the window popped up again. But lo and behold, it didn't pop up again.. I'm NOT using 2FA on my hotmail/MS account. The auth window hasn't popped up anything after this, for at least 15 minutes now.

When I restarted Outlook, the prompt came, but I was able to select remember password this time and it seems to have kept it.

UPDATE feb 8

Today the aut message came up again, refusing to save the password. When I cancel the window, Outlook presents a message in the bottom that a password is needed. When I click it, it accepts the credentials without the auth window even appearing.. Then it's connected to Exchange again for a while, until the auth window pops up again. Cancel it and clicking the message password needed makes it working again for a bit. Something is really broken..

Now that you mention it the amount of spam originating from Microsoft, which is by far the greatest offender in my experience, specifically from Microsoft Azure and Microsoft Tenant IPs identified in email headers, has also reduced in the last couple weeks, presumably by spammers also experiencing this issue. I used to report hundreds of spam messages to the Microsoft CERT team before giving up because they were evidently unable to make any significant headway to get on top of it. Rarely get spam originating from Google.