Same issue here, I think. Main account is using an M365 E5 which includes the licensing for Outlook. The second account I'm trying (and failing) to add is on an M365 Business Basic license and I think this is the problem. If the account was a free outlook.com account it would be fine, but as it's an M365 account it seems to throw the error as that M365 license doesn't include use of Outlook. Obviously the M365 E5 does, and the licensing is per-user, so I don't see why this is a problem.
Please clarify: Are you saying that the account being added to Outlook must be associated with a license that allows desktop apps to add it to Outlook on desktop?
I have a business standard M365 account which comes with desktop apps. I’ve had Outlook for Mac installed and my business account linked successfully for several years.
I’m now trying to add another email account (my m365 account on my client’s tenant), but I keep getting a similar message as the one that started this thread. The only difference is that it says Mac instead of Windows.
It seems many users here are experiencing the same thing, but as they have pointed out, the logic being used to explain the reason seems faulty.
Outlook is an email client. I have a license to use Outlook. It doesn’t make sense that I wouldn’t be able to add an account simply because that account holder doesn’t have a license to use Outlook (desktop app).