The message could not be sent with smtp.live.com, Server Response: 550 5.7.3 Requested action aborted; user not authenticated

Split from this thread.

Set up outlook as stated below;

Set up a new IMAP account

1. When viewing your message list, press Ctrl-Shift-T to start the Add your email accounts wizard.
2. Enter your email address, password and display name for outgoing messages.
3. Select Manually configure server settings and click Next.
4. For the incoming server, select IMAP from the dropdown.
   For the incoming server address, enter imap-mail.outlook.com and change the port number to 993.
   Select Requires a secure connection (SSL).
   For Authenticate using, select Clear text from the dropdown.
   For Log-on username, enter the full email address.
5. For the outgoing mail server address, enter smtp.live.com and change the port to 587.
   Select Requires a secure connection (SSL) and Requires authentication.
6. Click Next and Finish.

Now get error message 550 even after downloading 2012 essentials;

The message could not be sent because the server rejected the sender's email address. The sender's email address was *** Email address is removed for privacy ***'.

Subject 'Re: Please Let Us Know How We Did'
Server Error: 550
Server Response: 550 5.7.3 Requested action aborted; user not authenticated
Server: 'smtp.live.com'
Windows Live Mail Error ID: 0x800CCC78
Protocol: SMTP
Port: 587
Secure(SSL): Yes

Do you have a fix for me?
Thank You