UPDATE: It appears there is a workaround for this issue if you are willing to live with the restrictions. The Outlook 2016 authentication issue seems to be a change in the profile creation Wizard. The zeroConfigExchange registry value eliminates the Wizard. Bypass the Wizard and it just creates the profile and opens the mailbox. The limitation: Because it disables the Wizard, you cannot create an additional profile or a profile for any other email account but your own. The variant zeroConfigExchangeOnce key allows the creation of additional profiles but the prompt issues return with the Wizard. This behavior is described in this Microsoft support article.
Note: both registry values work to disable the Wizard in Outlook 2013 and 2010 and on on operating systems back to 2008 R2\Windows 7 even though the authentication issue is not present.
This is an UPDATE to a previous post “Outlook 2016 Can’t Create linked Mailbox Profile — Outlook 2016 Authentication Changes Impact Profile Creation“
It is beginning to look like this is not a just a linked mailbox issue. The traces seem to show that Outlook is simply not attempting to authenticate on it’s own at all regardless of the fact that it is a domain joined computer with an an authenticated user logged in.
This does not seem to be a pass-through issue. It happens on Windows 7 as well as Windows 10 so it does not seem to be an operating system issue either it is specific to Outlook 2016.
Because the prompt is based on the email address, a regular mailbox, the user will be successful without changing the ID but it still means a login prompt will occur where in Outlook 2013, the login and profile creation all happened automatically and the mailbox just opened.
In Outlook 2016, at least one login is required followed by a message to restart outlook (similar to the message a user gets when their mailbox has been moved). This may just be ‘as designed’ behavior but Microsoft has not said that yet. If so it is still an change that impacts user experience and support.