It sounds like your password has been changed. If you didn't do it, someone else did. The MS ID you use for your phone is a universal ID for Outlook, OneDrive, and phone apps. It's a little easier to shoot this trouble on a big screen, so all the following instructions should be done on the PC, not the phone...
1. Go to your AOL mail account and check the spam folder to see if the code emails were redirected there. If so, tell AOL that mails from MS are not spam. If the email is nowhere to be found, the hacker may have changed the email address in your MS account information also, but we'll try to get that next.
2. Sign on to your MS ID on a PC by going to live dot com (sorry, can't post URL links in the Ask a Question forum). Since the password is incorrect, you'll have to go through the code email issue here. If you added your cell # to your MS ID, you should also receive an option to tell MS that you want the code texted to your phone. If you don't remember adding the cell number to your account or if that option isn't given, you may have to try the AOL email again. Ideally, you've set up an alternate email address and can have the code sent there, but few people do this.
3. If you can get that code, you'll have to reset your MS password. Doing so here will also reset the password on your phone.
4. Do some security work NOW:
a. In your MS Account, go to the Security & Password section (see left column). Add your cell and a second e-mail address (not a work address! Use the Outlook address associated with your MS ID). If you created your MS ID with an AOL address, I believe you'll find an Outlook address in the Aliases section (see left column). Also in the Security & Password section, add your cell number if it is not already there.
b. Now change alerts to include both emails and your cell number. There's a link for that right below the list of email addresses and cell number.
c. Check Recent Activity (left column). Keep telling it to show more until there is no more (usually 1 month history shows). Drill down until you see maps for each incorrect password or security challenge record and look at the successful login immediately following each of those events. DON'T click the "This is not me" button. It will walk you through the password reset all over again and you just did that. You need to check this section periodically.
d. CHANGE YOUR AOL PASSWORD.
e. Do not use the same password for your phone, your email, your bank account, and Facebook. It's okay to have a list on paper for all your passwords. You have less cause to be concerned about someone physically entering your house and getting passwords than someone electronically entering your computer.
Please reply if any of this works, if none of it works, or if you need more information.