If you are still connecting to an on-premises Exchange Server in Outlook for Mac OS X, you may receive the following error even though your password is correct:
Mail could not be received at this time.
The server for account "" returned the error "Login failure: unknown user name or bad password." Your username/password or security settings may be incorrect. Would you like to try re-entering your password?
Outlook will continue to prompt you several times as it attempts to download your messages. The problem is that it usually will never stop even if you click the option Remember the password in my keychain. In this state, you can usually get it to give you your mail if you enter your password enough times, but it won't stay connected and you won't be notified when you get new e-mail.
This has issue has been occurring for me since at least August on both of my Macs and finally I got frustrated enough to try and resolve it. I searched in the Internet and found a few references to the error but no solution. I started by reaching out to my client's IT support and seeing if they ever saw the issue but surprisingly they never had. Maybe it's only an issue with the Office Insider Fast Ring.
Then, I used the Contact Support option in the Help menu of Outlook. I provided my log information and described the issue. I had a response in under 5 minutes. It turns out this is a known issue and there is no estimate for a fix on it. Here is a snippet of the response I received.
Please accept our apologies. This issue has been reported and we are aware and investigating. I also added your ticket to the report to get it fixed the soonest possible! We are sorry, we have no information on when a fix will be rolled out. We appreciate your understanding and patience.
The good news is that this is a known issue. The bad news is they don't have any idea on resolution yet. Unfortunately, this is an issue affecting an on-premises environment which means its priority for resolutions is probably quite low. Keep your fingers crosses if you are chasing this issue.