My Hotmail account works with OAuth2 authentication on the incoming IMAP server, outlook.office365.com, but the outgoing, smtp.office365.com, only works with normal password authentication.

Thanks, sfhowes. Unfortunately that doesn't resolve the issue. It prompts me for a password and then gives the same error message.

What is the antivirus, and are you using a VPN? Remove the entries for the account from Saved Passwords in Settings, check that you have smtp.office365.com, 587, STARTTLS, normal password, User Name = email address, then restart TB, enter the password for the incoming in the OAuth window (if the incoming is set to OAuth2), then send a message and enter the password in the prompt.

If it still doesn't work, you might have to disable mail scanning in the antivirus, depending on the brand, or disable the VPN.

I'm using Norton and Thunderbird is set as a safe program. No VPN. The company I work for recently changed our email provider and when I try to get TB to autodetect my email account, it pulls in the old settings over and over again. I do the manual set up and incoming emails work but outgoing don't. I've wiped TB as completely off my machine as I can think to do and started from scratch and tried every permutation of settings I can think of and it just won't work. Unfortunately I'm just transitioning to Outlook.com at this point.

If you can receive but not send, there's a good chance this is due to Norton scanning of outgoing mail and/or secure (SSL) connections. To test this, you could run Windows in safe mode, which bypasses startup apps like antivirus, or uninstall Norton and use the built-in Windows Security. There's no point in trying different server settings - use the ones mentioned above. With the correct settings, sending errors are almost always due to external apps.