Using classic Outlook for Windows in business environments
According to MS this is not related to any planned elimination of authentication protocols, etc. If you are using app passwords you should be all set, but most are still seeing the problem. When you reset your network or DNS, you get connected to a new server, and it seems some servers are having the problems and some aren't. When the problem happens for me, I have to bounce the network once or twice and it will go away as I get a new server that has the fixes applied.
The best way to go is modern authentication, but not all apps support that, at least not for outlook.com addresses.
Bounce your network connection (let it stay down for 30 seconds) and see if you can reconnect, may have to try it a couple times.
The reason it works if you keep hitting OK is eventually it tries another server (as you've likely gotten temporarily blocked from the server you were retrying to repeatedly, a security feature) and happens to get one that works that next time.