Hi everyone,
After gathering up some info and looking through all reports, it seems this was a Microsoft problem specifically with the OAUTH2 API (or servers for the OAUTH2 service) that caused the problem. It began September 24th and was resolved by Microsoft this morning (September 27th).
You should be able to login/sync as normal but in case the problem persists, please remove your account and re-add it as Other Mail instead of the Hotmail/Outlook.com option.
Martin