Hello,
When an outlook.com or hotmail.com alias is removed/deleted, it is gone permanently. Microsoft doesn't reuse its own email address, so it cannot be added to created as alias again. This is why it would tell you the email address already exists. This is to prevent others from reusing your email address and receiveing emails meant for you.
Microsoft explains it here: https://support.microsoft.com/office/add-or-remove-an-email-alias-in-outlook-com-459b1989-356d-40fa-a689-8f285b13f1f2
Under the section "Remove an email address", it says: "Are you sure? If you remove an alias that's an email address from a Microsoft domain (like @hotmail.com, @live.com, @outlook.com, or @msn.com), you're permanently deleting the alias and it can't be associated with any Microsoft account again."