I'm unable to add a new hosted Exchange email account to Outlook. I've tried with both Outlook 365 Classic and Outlook (New).
When I try to add the account automatically, Outlook recognises it as IMAP and cannot connect.
In advanced mode, after selecting Exchange, Outlook appears to me that it tries to connect to the Microsoft server, but it cannot find there the username, of course.
looks like it is a "feature" of the new Outlook. Looks like Microsoft wants to abandon all those users connecting to other Exchange servers than theirs (so-called "on-premises")
It seems that, from Outlook 2016 onwards, a feature called 'Direct Connect' has been introduced. This can bypass your DNS settings and connect directly to Microsoft 365 if it detects a matching domain. I found out that you can disable this behaviour in the Windows registry. I tried it, and it worked. But be cautious when editing the registry. Back it up first. Here are the steps:
Open Registry Editor (regedit)
Navigate to: HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\Outlook\AutoDiscover
Add a new DWORD (32-bit) Value: Name: ExcludeExplicitO365Endpoint Value: 1
Also add the same key under: HKEY_CURRENT_USER\Software\Policies\Microsoft\Office\16.0\Outlook\AutoDiscover
"New Outlook" is like an OWA interface but installed on the computer, it's not even able to write a .pst file like the "Outlook Classic", it's only able to read-only .pst file (not from far long however).