Using Outlook for iOS for personal email and calendar management
Your password is probably not the problem. The browser sign-in working on your computer tells me that. The iPhone problem is the temporary sign-in block that the repeated attempts triggered, so I would stop trying to sign in on the iPhone for now. Each new attempt can keep the block in place.
First, sign in once in a browser on your computer and complete any security check Microsoft shows you there. Check your recent sign-in activity and make sure no sign-in looks unfamiliar. Do not change your password unless Microsoft asks you to, or you see activity you do not recognize.
Next, remove the account from the iPhone only after that browser sign-in works cleanly. In the Outlook app, remove the account, and in iOS Settings, Mail, Accounts, remove it there too if you added it in Apple Mail. Restart the iPhone, then add the account again in the Outlook app first, using the normal Microsoft sign-in screen. Add it in Apple Mail only after the Outlook app works.
Your contacts changed because removing the account also removed its contacts from the phone, and iCloud became the source shown instead. Adding the account back should bring your Outlook contacts back. After that, check Settings, Contacts, Default Account, and set it to Outlook if you want new contacts saved there.
If the block is still in place when you try again, wait and try once more later instead of retrying again and again.