I'm seeing the exact same issue and have an open ticket with SmarterTools about this.

What seems to fix the issue for me is to create a registry entry at Computer\HKEY_CURRENT_USER\SOFTWARE\Microsoft\Office\16.0\Outlook\AutoDiscover (Office 2016 and later). Make a DWORD entry with name ExcludeExplicitO365Endpoint and value 1. This prevents Outlook from contacting Office 365 directly and instead will use autodiscover. I'm not seeing the login prompts anymore now, and my 2nd account in Outlook (which is an O365 mailbox) also works without problems.

More info: https://medium.com/jj365/outlook-issue-with-direct-connect-to-office365-352dd29de65 

Wanted to bump this as we have a user who is experiencing this issue and while I don't mind editing my own registry we've recently upgraded and only have a few users on MAPI with Outlook and adding registry entires for every user is not an optimal or efficient solution.