Outlook Keeps Prompting Connecting to Office365 Email

Outlook Keeps Asking for Password Credentials, Office 365. 

Outlook 2010 not fully completing the setup process when connecting to Office 365 can occur more often with Outlook installed on Windows XP. One of the signs to this problem is that under the security tab when using the manual configuration method does not display Anonymous Authentication as an option. Anonymous authentication works well but is the default for Outlook 2013, not Outlook 2010 and Outlook 2007. Outlook 2010 and Outlook 2007 do not have this option by default. In this specific case for which I generated this article, the desktop Windows XP and started out with Outlook 2007 which as one of the attempts at resolving this issue was upgraded to Outlook 2010 with SP1. The first two check-marks appeared during automatic Outlook setup but the third would repeatedly prompt for a password. The setup would not fully complete. The password was correct and was tested using Outlook Web Access.

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Outlook Office 365 Configuration Does not Complete

Outlook Keeps Prompting for Password  

Outlook 2010 with SP1 installed on Windows XP with SP3 and other updates would not connect to Office 365 for email. It would not fully setup. Outlook constantly prompted the user for a password. The password was well known and being entered correctly. As previously mentioned this desktop originally had Outlook 2007 which was upgraded to Outlook 2010 and this upgrade process may not have been required at all. One of the best ways to assist users with this problem and to provide support for this and other issues is by using software that enables access over the web. In particular, to connect to a remote computer system and fix the technical  problems remotely with online software for remote desktop control. The software enables remote connectivity and access. This Outlook email and other technical general desktop issues in general can be resolved with screen-sharing. 

Resolving Outlook Setup Not Completing with Office 365

A little more back ground first to help set the stage as to why the focus was completely placed on the local desktop and environment. The user's account setup with no problem in Outlook on an off-site computer desktop. The off-site computer was not connected to the domain and there was no VPN connecting it to the domain.

The steps taken to resolve this issue consisted of : 

Registry Changes: 

Run Regedit and go to  HKEY_CURRENT_USER\Software\Microsoft\Office\14.0\Outlook\AutoDiscover
for Outlook 2010

Add or modify the following

"ExcludeScpLookup"=dword:00000001
"ExcludeHttpsAutodiscoverDomain"=dword:00000001
"ExcludeHttpsRootDomain"=dword:00000001
"ExcludeSrvLookup"=dword:00000001
"ExcludeHttpRedirect"=dword:00000000
"ExcludeSrvRecord"=dword:00000001

These keys could also be added to help prevent Outlook frm using the local CAS server if one exists on your network. In this case there was indeed a local Exchange 2007 server. The customer had migrated to Office 365 but the local Exchange server was still present on the network and int he domain.

[HKEY_CURRENT_USER\Software\Microsoft\Office\14.0\Outlook\AutoDiscover\RedirectServers]
"autodiscover-s.outlook.com"=hex(0):
"autodiscover.outlook.com"=hex(0):

The only look-up type that will be used now is HTTP Redirect to the XML file. If this fails, there'll be no Autodiscover. This removes local domain interference.

Microsoft Hotfix to Connect Outlook to Office 365 

The most generally accepted suggestion from many forums, but seems not to always work for people having this problem with Outlook connecting to Office 365,  is to run Windows updates and update your operating system and Microsoft Office installation (at least Outlook 2010). As mentioned previously this particular desktop had Outlook 2007 with Office 2007, I upgraded only Outlook.  Perhaps I did not need to upgrade Outlook at all. The operating system already had Service Pack 3 for Windows XP. I did not run Windows updates because I did not want to have other applications break.

Add the anonymous option to Outlook Logon Security Option list. 

Instead of running every single Windows update available which did not work for many people having the similar issue with Outlook and Office 365, I ran the following a hot-fix. The hot-fix both added the Anonymous option to Outlook's configuration options and enabled Outlook to connect and fully configure to Office 365.

KB Article Number(s): 2791026 Language: All (Global) Platform: i386 Location: (hotfixv4.microsoft.com/.../462115_intl_i386_zip.exe)
KB Article Number(s): 2791026 Language: All (Global) Platform: x64 Location: (hotfixv4.microsoft.com/.../462116_intl_x64_zip.exe)