This error generally occurs because Outlook is checking the local credential manager when attempting to log into the account, rather than checking the Exchange server.
When it does this, Outlook is attempting to check your email using your login details for the computer, rather than the login details for your Exchange email account.
You can fix this problem by following these steps:
- Close Outlook
- Go into your Windows Control Panel
- Go into ‘User Accounts’
- Select ‘Mail’
- Click ‘Email Accounts…’
- Remove all Exchange accounts
- Click ‘Close’
- Select ‘Manage Windows credentials’ from the User Accounts window
- Remove all details that relate to email and Outlook
- Tick the dropdown button and click ‘Remove from Vault’
- Open Outlook and add in your Exchange details
- You should be able to now set up your Exchange mailbox