Forgive me if some information is missing, I did my best to read this thread thoroughly.
Have you added the server name address to the trusted sites section of Internet Options? Adding pop3.live.com to the trusted sites should resolve the prompting.
( Internet Options > Security > Trusted Sited )
After this is done go into Custom Levels and scroll to the bottom. Change the Logon option to Automatically log on using credentials.
Let me know.
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