Forum Discussion
I believe I've identified a bug in the Hotmail
I believe I've identified a bug in the Hotmail password reset process. When I forgot the password for my long-standing Hotmail account and initiated the password reset procedure, I was prompted to provide my Skype ID and an alternative email address to receive the reset code. I received the code and successfully reset my password. However, when I attempted to sign in, I encountered an error indicating that my email was blocked due to incorrect password entry. What's puzzling is that I can still reset my password, which I did, but the same error message persists when I attempt to sign in.
It could be that the account is locked for additional reasons and a support agent needs to take a closer look at it.
How to do that and additional help is published here;
Unblock my Outlook.com account - Microsoft Support
There is also some information posted here with a Sign In Helper tool, but that might not help in your case (could be worth a shot anyway);
I can't sign in to my Microsoft account - Microsoft Support