Care to mention what version of Thunderbird you're using?

Looks to be 102.7.0 64 bit.

Thunderbird 102.7.0 was scheduled to be released on Wednesday, January 18, but it was decided to hold the release because of an issue detected which affects authentication of Microsoft 365 Business accounts.

Please note that automatic updates are currently disabled, and users of Microsoft 365 Business are cautioned not to update.

Users who updated already and encounter difficulty can simply reinstall 102.6.1. https://ftp.mozilla.org/pub/thunderbird/releases/102.6.1/

Thunderbird should automatically detect your existing profile. However, you can launch the Profile Manager if needed by following these instructions. https://support.mozilla.org/en-US/kb/profile-manager-create-and-remove-thunderbird-profiles#w_starting-the-profile-manager

Alternatively you can wait for the release of Thunderbird 102.7.1 which has a fix. It is expected to ship soon, possibly sometime this week.

When I downgrade to 102.6.0 (64 bit), Everything works fine again.

Well apparently it was released anyway. In fact it's still the current download on Thunderbird.net. Next time, PLEASE hold off releasing known broken software.

I have encountered the same problem. I also downgraded back to 102.6.1. Everything worked again. Now the 102.7.1 update is available that is supposed to fix the authentication problem. It doesn't. I had to revert back once again to 102.6.1 in order to solve the problem.

102.7.2 does not fix this issue!!!

I updated to 102.7.0 and as others have reported could no longer authenticate to Microsoft 365 Enterprise. I reverted to 102.6.1 and everything worked again. I held off updating to 102.7.1 due to reports that this was still an issue with that release even though its release notes claimed to fix the issue. I have now tried to update directly from 102.6.1 to the 102.7.2 release of yesterday. That release still breaks the authentication to Microsoft 365 Enterprise. I have again reverted to 102.6.1 and now everything works again.

I am reluctant to interrupt my productivity by trying a two-stage upgrade (first to the supposedly fixed 102.7.1 then to 102.7.2) unless someone else has already tried this and can verify it is necessary and works???