Hey there! Nice to meet you!
Based on your description, the error you are experiencing is an indication that your account was compromised. The hacker was able to remove the account's primary email address/security info and replace it with their own email address, which is why your account is not recognized, and you're being asked to create a new Microsoft account using the same primary email address.
The only way to recover a hacked account is through the official Microsoft troubleshooter guide:
If the account recovery web form doesn't work, and since the security info has been replaced by the hacker, I'm afraid there is no other working method to recover the Microsoft account, and Microsoft Support cannot help either.
However, I would recommend reaching out to Minecraft Support regarding your Minecraft account if they can provide an alternative option:
https://help.minecraft.net/hc/en-us/request/new?ticket_form_id=360001225811
Thank you for your understanding.
Best regards,
Darhyl