Using classic Outlook for Windows in business environments
I ran into this recently, because my new company requires the 2-digit code method, and ONLY uses Microsoft Authenticator. The solution, which sucks, is you have to NOT be on Wi-Fi. You can only get the two-digit code entry popup while on cellular data. And if you turn your Wi-Fi back on after you get the code, and before you submit the code, it will not work.
Something Microsoft should fix, it looks like a lot of people are spending a lot of time trying to get this to work.