In Office 365 environment the only time that we need to use the possibility of creating Outlook mail profile manually is in case that the required DNS setting for the Autodiscover record is missing and, we cannot use other “workaround” for the task of configuring Outlook mail profile automatically. Mar 28, 2018 Its Outlook 2016, it relies on Auto discover I could have sworn the days of manual config are over. Might be worth a call to Microsoft, everything works perfect its only when I license a user created in Office 365 with an Exchange online license and the same email as on premise that Outlook 2016 decides to connect to the Office 365 mailbox and not the on prem. Highly suspect my SRV record.
To your question about using the Manual Office 365 option this is only for customers that have email accounts hosted by Office 365 Exchange Online. It is not intended for Outlook.com accounts. Per the topic I referenced above you should re-add your account to the profile using the Mail Applet.
You can configure Microsoft Outlook to access your Office 365 account by setting up an Exchange connection. An Exchange connection provides access your email, calendar, contacts, and tasks in Outlook.
You can also set up Outlook to access your email by using IMAP. However, if you use IMAP you can only access your email from Outlook, not your calendar, contacts, and tasks.
Notes:
Outlook is included with Microsoft Office 365. Faculty, staff, and graduate students with a full-service SUNet ID and undergraduate students with an Office 365 account can download Microsoft Office for Windows via webmail for free. See Microsoft Office for Windows for more information.
You can use Outlook on your laptop or desktop computer when you’re not connected to the Internet. Email, calendar, and other items are kept in an Outlook data file on your computer so you can work offline. You can set the duration of this setting to 1, 3, 6, 12, or 24 months, or All.