2 way verification disabled on Microsoft account but it's still prompting a 2 way...

It should be added that, if 2 step verification is turned on, then you can't recover your account that way:

"Note: If you've turned on two-step verification, you can't recover your account this way"

He certainly had access to the confirmation medium as well.

Put 2-Step Verification on all your accounts.

The only way of security is this verification

Do you not have your 2 step verification backup codes?

When you initially turned on two step verification it would have provided you with several one time use 2 step verification backup codes (which are meant for this very situation) so that if you lose/change your phone number youd still have another way to get back into your account.

Did you save said codes somewhere?

I solved my own issue (after a few hours) by doing this: signed in to my microsoft account / disabled 2 step verification in my security preferences / went back to xbox360 console / entered password and worked. And it only took exactly 5 hours. After I deleted
all my profiles in my console, deleted all the caches, on both computer and console, reset my console back to factory defaults, and did everything in the world! Then last: when I saw 2 step verification in my microsoft account security settings it reminded
me of my paypal account where I use 2 different password steps to sign in. I thought, maybe the console does not support entering 2 different passwords (2 step verification) so I turned it off. Now my console let me in!!!
[MOD REMOVED] you microsoft !!!!!!

Be sure that your account is extra safe by adding 2 step verification. But there is no way for Xbox to track the console. You would have to rely on your local authorities to assist with that.