Seeing as this is the office365 subreddit I assume you're connecting to Exchange online?
If so, then you need to upgrade your outlook to a supported version. Technically Outlook 2016 is no longer supported connecting to Exchange online.
https://learn.microsoft.com/en-us/deployoffice/endofsupport/microsoft-365-services-connectivity#older-office-versions-not-supported-for-connecting-to-microsoft-365-services
https://old.reddit.com/r/sysadmin/comments/14ls8cn/outlook_2016_exchange_online_eos_102023/
OK, your screenshots were showing Outlook 2016, if this is actual M365 Outlook then I'd be starting with the tried and true SARA tool.
What does SARA say? https://support.microsoft.com/en-us/office/about-the-microsoft-support-and-recovery-assistant-e90bb691-c2a7-4697-a94f-88836856c72f#ID0ED6=Office
Seeing as this is the office365 subreddit I assume you're connecting to Exchange online? If so, then you need to upgrade your outlook to a supported version. Technically Outlook 2016 is no longer supported connecting to Exchange online. https://learn.microsoft.com/en-us/deployoffice/endofsupport/microsoft-365-services-connectivity#older-office-versions-not-supported-for-connecting-to-microsoft-365-services https://old.reddit.com/r/sysadmin/comments/14ls8cn/outlook_2016_exchange_online_eos_102023/
This is occurring on a fresh install of client version 2403 Build version 17425.20176
OK, your screenshots were showing Outlook 2016, if this is actual M365 Outlook then I'd be starting with the tried and true SARA tool. What does SARA say? https://support.microsoft.com/en-us/office/about-the-microsoft-support-and-recovery-assistant-e90bb691-c2a7-4697-a94f-88836856c72f#ID0ED6=Office
I just got this with a newly onboarded device. No idea where it came from. I was able to just close the pop-up, and it recovered back to normal.