I have had similar problems in the past...trying to recall all the things I did to resolve but will try to put them down for you to try. Hopefully they will help but not guaranteed.
As an FYI, Microsoft has been steadily migrating accounts to the Office 365 platform which I think is the cause of this. If you log into the web mail and get a "Welcome to you new inbox" message you could have had your mailbox migrated.
First off, I use a custom domain as my main ID and email address which causes some of my problems. This was the ID I always used to log in with.
I ended up creating an alias to my account with an outlook.com domain on it but left my previous email address as my primary alias.
Then, I created a new email account in Apple Mail but set it up as Exchange instead of Outlook.com. I used my new outlook.com alias in the initial setup so it will auto-detect all the servers. This was enough to get email working but emails will be sent as if they are from the outlook.com address which you may not want. I then edited the email account settings and set the email address to my custom email address but left the username field as the outlook.com address.
Like I said, pretty sure that is what I did which got things working properly but I'm not 100% certain...hope it helps.
D