Sending, receiving, and organizing email in Outlook.com
@Carlos Anon said
Is anyone able to tell me what this error actually means and how I can fix the issue?
Microsoft has put your wife's Yahoo account on it's Blocked List. It will not deliver any emails from that account to your live.com.au account until the block is removed. There is nothing you can do from your end to fix this. It's being blocked by the Microsoft Mail Servers before it even reaches your Outlook client.
If Yahoo can't offer any help, you can request the Yahoo account be de-listed yourself at https://sender.office.com/