After spending the past 6 hours speaking with Apple and Microsoft support staff I can confirm that the issue is with Outlook.com accounts. I'm not sure if this is a new update, and that's why you're accounts may have worked previously, but this is what I was told;
Microsoft does not allow free Outlook.com accounts to be linked through Microsoft Exchange servers. You will be unable to connect your Outlook.com account using Microsoft Exchange, unless you have a Microsoft 365 subscription plan with Exchange Online features.
You might be able to connect your free account through the exchange server, but it may be unreliable, I assume this will depend on wether your subscription is active or not.
Kind of a bummer, but potential work arounds for using macOS apps with an Outlook.com account would be;
- Getting a Microsoft Exchange subscription
- Forwarding your mail to an alternative compatible service
- Temporarily doing either of the above until Outlook.com is added to macOS, although this is not guaranteed.
Other options would be to use Outlook web or Outlook for Mac when on your Mac or MacBook, and use iOS mobile devices to connect to your Outlook.com accounts.