I recently set up two-step verification for my Hotmail account, but now have no access to the account on my Droid Mini phone.
I get “can’t connect to the server” message. What to do?
App passwords and two-step verification
you need to create unique app passwords for those services which are not compatible with the 2 step verification.
"The steps for generating a new app password are always the same:
Sign in to your Microsoft account.
Under Password and security info, tap or click Edit security info.
If you're prompted for a security code here, enter it and tap or click Submit.
Under App passwords, tap or click Create a new app password.
A new app password is generated and appears on your screen.
The way you enter an app password can be slightly different, however, depending on the app or device you're trying to sign in to."