Cannot add an Exchange account to Outlook 2016 on OS X El Capitan
I believe that Outlook 2016 will not connect to anything earlier than an Exchange 2010 server and it sounds like that is likely an Exchange 2007 (or earlier) server.

If this is the case than you are outta luck until that mail server is upgraded to Exchange 2010, 2013 or 2016. Either that or downgrade to the previous version of Office for the mac.