Error '407 proxy authentication required' is popping up when using Salesforce for Outlook

This error is caused by a proxy server with basic authentication configured in Internet Explorer. There are two main resolutions: bypass the proxy for Salesforce URLs, or configure the proxy exception list.
Resolution 1: Add Salesforce URLs to the Proxy Exception List
Ask your IT team to add the following URLs to the proxy server exception list so traffic to Salesforce bypasses the proxy:

• salesforce.com
• *.salesforce.com
• *.force.com
• *.login.salesforce.com

Resolution 2: Configure the Exception List in Internet Explorer

1. Close all applications. Press Windows key + R, type inetcpl.cpl, and press Enter to open Internet Options.
2. Click the Security tab. Click Trusted Sites | Sites and verify that `<REDACTED> is listed. If not, add it and click Close.
3. Click the Connections tab and click LAN Settings.
4. Under Proxy Server, if "Use a proxy server for your LAN" is checked:
   1. Click Advanced.
   2. Under Exceptions, enter the following: salesforce.com;*.salesforce.com;*.force.com;*.login.salesforce.com
5. Restart Internet Explorer, then restart Salesforce for Outlook. The login screen should appear.

Note: If the proxy exception list cannot be modified due to corporate policy, work with your IT team to whitelist the Salesforce URLs at the network level.