Here are the steps that I followed to get the Outlook CRM Online Add-in to authenticate users. This might be overkill, but it should help others.
Control Panel/Credential Manager. Remove ALL entries.
IE/Tools/Internet options. Delete browsing history—Check all items click Delete
IE/Tools/Security/Trusted Sites. Delete all. Add *.crm.dynamics.com and *.microsoft.com
IE/Tools/Advanced. Click Restore advanced settings. Click Reset.
Open configuration Wizard, choose CRM Online, click Test Connection, which should fail.
Click the error window and you should receive a challenge from CRM Online
Enter the UID and password for CRM, which should (now) be accepted.