Hi there, I'm sorry you haven't been able to get this working.
Everything looks set up properly on the WordPress.com side.
Have you tried following the instructions from Outlook that Zandy linked to earlier:
For security purposes, after you add an email address to use with your Outlook.com account, you must verify that the added email address belongs to you.
To verify your email address, sign in to the email address that you added, and then click the link in the verification email sent from the Microsoft account team.
If you don't receive a verification email at the email account that you tried to add:
1. Sign in to Outlook.com with your Microsoft account.
2. In the upper-right of the Outlook.com window, click the Options icon Options icon, and then click More mail settings.
3. Under Managing your account, click Sending/receiving email from other accounts.
4. Click Resend verification email.
5. Sign in to the email account that you added, and then click the verification link.
If you're not getting the verification email mentioned in step 4, or if you did verify it but your email still isn't working, it sounds like you'll need to contact Outlook support to troubleshoot at their end. Their forums are here: