When setting up the Outlook 2016 desktop client to connect to an outlook.com hosted email address you should use ActiveSync and the correct server setting is m.hotmail.com. This should work. When you review the settings you will find that the server has automagically changed to something like blu999-m.hotmail.com. This also works, I assume that this the actually server you are using.

Confusingly when I log on to outlook.com using my web browser and inspect the URL I am not on blu999-m.* so don’t assume that is how to find your server, stick to using m.hotmail.com and let ActiveSync do the resolution for you.