Managing personal Outlook.com account settings, security, and privacy
Hey there! Nice to meet you!
The only way to recover a hacked account is through the official Microsoft troubleshooter guide:
If it doesn't work, and if the email address has been replaced by the hacker, I'm afraid there is no other working method to recover the Microsoft account, and Microsoft Support cannot help either.
However, since you mentioned that you were able to contact Support and sent you an escalation, your only option is to wait for their instructions and results. "I contacted support through Xbox live chat, and they sent an escalation email to my new MS account email."
If you haven't received any response from them after 72 hours, you can try contacting them again for a follow-up on your case.
If they have confirmed that the information is not enough or an escalation is no longer possible, they may permanently suspend your account to prevent the hacker from using it, just like what happened to your friend "it has indeed been hacked, and he owns the account, but they suspended it.".
Thank you for your kindness and understanding.
Best regards,
Darhyl