Using classic Outlook for Windows in business environments
Just to chime in, but I am having exactly the same issue as Olli and raynerph have described. Fiddling with the registry, removing and adding the account again does not help. Removing the two step verification will solve the problem, but that is not what I want to do. After activating two step verification - the password popup has returned. Temporary fix for one "sessions" is to create a new app password and enter it... Just to repeat again on the next day. Sometimes when it pops up in the middle of the session, then as previous posters stated, clicking on the "Need password" button simply helps without enterying anything and the password field even doesn't show up - just connects to exchange server and that is it.
Just in case - the account affected is an old hotmail.com account.