Microsoft may be requesting an app password in the background. Try the steps described here:

(quote)

1. Sign in to your Microsoft account.
2. Under Password and security info, tap or click Edit security info. If you're prompted for a security code here, enter it and tap or click Submit.
3. Under App passwords, tap or click Create a new app password. A new app password is generated and appears on your screen.
4. Switch to the app or device for which you need the password, and enter the app password displayed on the screen.

For more info about signing in to specific devices, see App passwords and two-step verification.

(end quote)

The info may be outdated. What triggers the error may be the page asking you to protect your account by a secondary email or code when logging in using webmail. Try visiting that and enter the email or (let it) send the code.

Also see When you can't sign in to your Microsoft account.

Could you report back?

I don't have two step verification enabled so I don't even get to app passwords. It seems confused.

I've tried downloading inky and claws mail. Like TB they can't get access either to my Hotmail account.

That would indicate it is something Microsoft have changed and the 3rd party clients are not coping with.

Have a look at my blog post and verify your account settings using the information supplied there and your outlook.com mail account.

Hi Matt, thanks for the reply. A link to the blog post you want me to read would be great... I can't find it from your profile!

https://thunderbirdtweaks.blogspot.co.uk/2016/06/hotmail-proxy-errors.html

It seems confused allright. I’m also afraid Matt’s article describes the issues for POP access only.

The short answer: could you please read this question? You are not alone.

Hello, if that can help, I posted a workaround here https://support.mozilla.org/en-US/questions/1147439

there were many reports last week about service. http://downdetector.com/status/outlook might offer some insight

perhaps https://portal.office.com/servicestatus

So I guess I posted wrong as a seperate ? here is my post. https://support.mozilla.org/en-US/questions/1148907?fpa=1#question-reply

I did check the 2 step, I have changed the alias, I switched to pop3 and back to imap - Am I too tired to get this?

What is going wrong? As or eMailtray and inky - they both had no problem. But I don't think those programs.

Please help, Thank you TLM

So ran across another forum - I did reinstall TB before but to no avail. So I am backing it up this time, ripping it out and starting from scratch. Let you know how it goes.

So it sort of worked - I now have outlook alias coming into TB. Only thing is I can not find where to get it into the the local inbox. Help?

What do you mean by "the local inbox"?

tlm2016: It looks like you added the alias as a new account in Thunderbird, though I may be wrong. In that case and when using POP, you would need to click the Advanced... button on the right when in Server Settings on the left to set whether or not the Local Inbox will be used. This is not possible when using IMAP.

However, if you only replace the Username under Server Settings for the existing Hotmail account (right pane, near the top), nothing else should change for that account. Only the username to log in with is important (as long as the issue is valid - it should be resoved by now), so that’s what counts, and what the "trick" is about.

It's working now. Thanks everyone. I had switched to an alias - outlook.com and it worked. [but I had both in TB the hotmail.com and the outlook.com] after seeing that Microsoft had addressed the issue - I switched the hotmail back to primary and deleted the outlook account from TB. Works great now. I am wondering if part of the problem was while my husband was at CC for over a month that I just had an insane amount of email back up in hotmail. Works now - happy for it as that is my main account and am now getting my messages.

Zenos - I meant the inbox under local folders.