Here too in April 2024. Until "The new Outlook" I was able to configure an IMAP username which is not the email address in ALL free Microsoft email client products since 1998. Now it seems Microsoft doesn't WANT users to use their free email software anymore, except you bought Office 365 or use Live (which is a Spam hell since a few years btw.).
After 6 months I don't expect that this is getting better (and since I need to read my email...), so I have no choice and change to Thunderbird. It's free also, but it has that simple, basic and absolutely required feature for authenticating at an IMAP server: It's possible to enter an username! Wow.
I wonder how it is even possible that a big company like Microsoft does "forget" something like this in a product which Windows users are forced to use, after Windows Mail (which worked actually well so far) was purged suddenly, and I don't believe that this was a mistake. So better say good bye to "The new Outlook" and move on to an email client that is usable. Don't waste time with sending feature requests that are being ignored. because Microsoft don't WANT you to use their product for free anymore.
By the way you can also use Thunderbird with Office 365 and Live on many OS (not only Windows), and it does offer WAY more features than any Microsoft email client software did ever.