Hi Joseph,
Thank you for informing us that you're encountering the authentication error when using the Outlook.com app. We are already aware of this issue and our Product Group is working on a fix. We don't have a timeframe when this will be resolved but we'll inform you as soon as we get an update. I'm sorry for the inconvenience that this problem has brought you.
The temporary workaround we can suggest is to access mail via phone browser at http://m.mail.live.com or to use a native Exchange ActiveSync client (default email app) on your phones to set up a Outlook.com account. It can be either “Hotmail” or “Exchange”.
Regands and peace be with you too,
Raymond