Outlook Mobile funnels all mailbox traffic through their autodiscover/middle-man services and a lot of the time when we see issues like this it is due to them having something cached on their end such as the old password. One workaround/trick that might work is adding the account back in Outlook Mobile using the old password, then removing it again and choosing the option to remove the account from ALL devices. That should force the Outlook services to flush out any cached account data so that the next attempt is a fresh sync to the SmarterMail server.
Kyle Kerst
IT Coordinator
SmarterTools Inc.
www.smartertools.com