Windows Extended Protection (WEP) has been added to all Exchange infrastructure to further improve the security and follow the guidelines provided by Microsoft. As a result, there have been cases where the password prompt is occuring as some Anti-Virus scanners checks Outlook.
Step 1: Please ensure that all updates are installed for both: Windows OS, and Outlook client (or Office suite).
Step 2: Is Anti-virus currently in use? If it is, temporarily disable it, or add Outlook client to allow /exceptions list for any network traffic to not be scanned with AV. Known issue is with Kaspersky.
How to bypass in Kaspersky:
Outlook should then prompt for a password, however once you enter it
Step 3: If Outlook still does not connect, another possible solution is to apply Registry fix: on the clients computer, that gets constant password prompts when opening Outlook, check registry:
* look for a LmCompatibilityLevel --> If there is no entry for it, create one by following the below steps:
Right click > New > DWord (32-bit) Value
Value name = LmCompatibilityLevel
set value = 3
You can change the value of the registry fix to either 3,4,5 and these options that can have varying degrees of success.
Step 4: If issues still persist, please contact support at email@example.com