I found the instructions on how to use the Recovery Code for a Microsoft Account:
Microsoft account recovery code
After finding these instructions now, I may test these on my test Microsoft account. Now I see why I did never see the Recovery Code option, probably did not go that far to see the option become available.
How to sign in with a Microsoft account recovery code
- Start signing in to your Microsoft account by entering your username at account.microsoft.com/account. Sign in
- If you don't have access to any sign-in verification method or have forgotten your password, select __Other ways to sign in__. Note: Some of the following steps may vary, depending on the level of security on your account and the range of numbers or email addresses you have added.
- Select Use my password then Forgot password?
- Select Use a different verification option then I don't have any of these.
- At the Do you have an account recovery code? prompt, enter your recovery code. Tip: Recovery codes are not case-sensitive and don't require spaces or dashes.
- Once you enter a valid recovery code, you will be given the option to update your password. Note: If your account has two-step verification turned on, you must wait 30 days for changes to take effect. Learn more.