Basic Auth should ( and will) be blocked in Exchange Online:
https://learn.microsoft.com/en-us/exchange/clients-and-mobile-in-exchange-online/deprecation-of-basic-authentication-exchange-online
Using a conditional access policy works for all accounts even those not in Exchange, so use both
Not sure I understand how you are verifying its not working however.
Why are you recreating the Outlook profile? Are you trying to block it ? its an old client?