Ok from the log above, sounds like TLS 1.2 is not enabled or working properly in Windows 7.
Have you done the following Registry Win 7 modification ?
Note: If you haven’t do the mod and then reboot your computer and try again and should work ok.
Note:- If you have done the TLS 1.2 registry mod and have rebooted, then another user with Windows 7 found changing to the below IMAP settings worked. This is the “Non Encrypted” Outlook Port settings.
IMAP
Host: outlook.office365.com
Port: 143
Security Policy: Force usage of SSL/TLS