Managing personal Outlook.com account settings, security, and privacy
"Outlook supports Modern Authentication in all current Microsoft 365 subscription SKUs and Outlook 2021 LTSC (any SKU with build 11601.10000 or higher) when connecting directly as Outlook.com. If your Outlook is configured to connect to Outlook.com using POP or IMAP, Modern Authentication is not supported. This means that when Basic Authentication is fully deprecated, it will no longer connect." Are you connecting via POP or IMAP?