Has there been a 2-year gap since you used it last?
Or
Did you delete the email address from a Microsoft account as its alias?
From what you described, this email address was deleted, either manually or due to inactivity. Once an outlook.com or hotmail.com address is deleted, it is gone permanently. Microsoft doesn't recycle these email addresses, hence you will not be able to add it back to a Microsoft account, or to create it as a new account.