Hi, I'm John! I will help you with this.
About creating a new account with the same address, unfortunately, that’s not possible. Once a Microsoft account (Hotmail/Outlook) is closed, the email address cannot be reused again. It’s permanently retired for security reasons.
Your best path is to contact the game’s support and explain the email is permanently closed. Most games can transfer the account to a new email after identity verification.
I really hope this information is helpful! Let me know if you have any further questions or concerns.
Regards,
John J.D.