Here is the solution. If it helps, please just reply that it did. If you're unable to access your hotmail and it's saying username/password incorrect, or server connection failed, then try this. Apple has put in a security messure if you try to change your password; but unfortunately they are not forthcoming with a solution.
1) Log in though Safari to access your hotmail account.
Once you're in, go to the top of the page and click on the cogwheel and you will see options; Click on Options.
2) This will bring up another page. Look for Account Info. and click Security Info.
3) You will see App Password - Create Password
Click on App Password.
4) This will generate a new password for your phone. You must use the password it creates for you. Enter it int
the Settings Icon, under mail, emails, ect.
5) Once this is done, it will remember the password it generated. It's important to note that the generated password for your phone will not be the one you use for your laptop. Meaning, if you were able to log onto your laptop to get the emails; but not your phone; then just keep your password the same, and you'll just have a generated password for the cell phone. But this solution does work. I hope I haven't confused anyone, but I just wanted to share this with anyone who might be having these issues. Please mark if it has helped you. Thank you.