I am trying to convert my hotmail.com email account to connect with IMAP instead of POP3. I use Mail.app on OSX 10.8.5 to receive my email.

However, I cannot log in to my account via the IMAP protocol. I've configured my account exactly to the settings specified in this post.  What happens is that Mail.app continually asks for my password as if it cannot authenticate with the server.

To further troubleshoot the issue, I used Mail.app's Connection Doctor feature to get more detailed information on what's going wrong. This is the output I get related to my hotmail.com account:

INITIATING CONNECTION Oct 12 12:41:02.041  -- host:imap-mail.outlook.com -- port:993 -- socket:0x0 -- thread:0x7f829e609ba0

CONNECTED Oct 12 12:41:02.343 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829e609ba0

READ Oct 12 12:41:03.143 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829e609ba0
* OK Outlook.com IMAP4rev1 server version 17.2.0.0 ready (DUB451-IMAP133)

WROTE Oct 12 12:41:03.248 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829d46eb70
1.1692 CAPABILITY

READ Oct 12 12:41:03.396 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829d46eb70
* CAPABILITY IMAP4rev1 CHILDREN ID NAMESPACE AUTH=PLAIN AUTH=XOAUTH2 SASL-IR

READ Oct 12 12:41:03.539 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829d46eb70
1.1692 OK CAPABILITY completed

WROTE Oct 12 12:41:03.598 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829b4e5520
2.1692 ID ("name" "Mac OS X Mail" "version" "6.6 (1510)" "os" "Mac OS X" "os-version" "10.8.5 (12F45)" "vendor" "Apple Inc.")

READ Oct 12 12:41:03.745 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829b4e5520
* ID ("name" "Outlook Imap" "version" "17.2.0.0")

READ Oct 12 12:41:03.896 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829b4e5520
2.1692 OK ID completed

WROTE Oct 12 12:41:03.936 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829d46eb70
3.1692 AUTHENTICATE PLAIN  (*** 48 bytes hidden ***)

READ Oct 12 12:41:05.468 [kCFStreamSocketSecurityLevelTLSv1SSLv3]  -- host:imap-mail.outlook.com -- port:993 -- socket:0x7f829d636040 -- thread:0x7f829d46eb70
3.1692 NO Error 10. Server error. Please try again later.

I've seen other posts describing a similar error code, which leads me to believe this is an account or server issue on Microsoft's side. Any assistance in resolving this issue would be greatly appreciated.