trying to set up my Ipad with my hotmail account. Also have a 4 digit ID security code with Microsoft

In common with many other Mail providers, Microsoft require the use App Specific Passwords to access IMAP or POP3 mailboxes.

The Mail App on each of your devices, such as your iPad, requires a unique password to be generated from within your Microsoft account. This App Specific password intentionally differs from your Microsoft account password - and can only be used to access your MS (e.g., hotmail) mail.

More information about Microsoft’s App Specific Passwords can be found here:

https://support.microsoft.com/en-us/account-billing/using-app-passwords-with-apps-that-don-t-support-two-step-verification-5896ed9b-4263-e681-128a-a6f2979a7944