Antivirus (Bitdefender) turned OFF for purposes of test. NO CHANGE IN BEHAVIOR

Gmail is it's own dance, but you do need to accept cookies (settings>privacy&security) and I always advise to NOT insert password, but wait until Google prompts for it. Once you respond to the Google prompt and click the 'allow' button, Google inserts a dedicated password for that PC to access Gmail - not transferable. That is, Google does not allow email clients to use the same password that you use for online access.

Disclaimer - I've been using Thunderbird for 15+ years I've managed a technical support department for software

This is driving me bonkers.

cookies are accepted (see image) Followed through normal setup steps. All goes as it SHOULD except for last step.

I've even created an App Password - no luck

Thunderbird works just fine for my GoDaddy Office 365 accounts (using Owl).

HAD been working fine until I updated my password with Gmail.

I'm sure this is something stupid I'm missing.

Remove the account's entries in Settings, Saved Passwords, restart TB, enter the account (not app) password in the OAuth window.

I've removed accounts, removed passwords, uninstalled the program, scrubbed the registry. Reinstalled, entered account (no password) waited for it to prompt me with the Gmail request for password, did the secondary authentication dance with Google looks like it would work then it rejects it saying problem at server.

Works just perfectly with Outlook. So, it's not a password problem...

Try it with Windows running in safe mode, to ensure no effects from startup apps like Bitdefender (turning it 'off' is no guarantee of non-interference). You might also consider removing 2-factor authentication from the account, in case it's a factor (and not really necessary anyway).

I THINK I have RESOLVED the problem.

I was running PostgreSQL Server 16 x64 version

When I disabled this service on startup, Thunderbird would complete the authentication and allow email to start flowing.

Manually reenabling the service seemed to not prevent authentication.

I don't need PostgreSQL server running on startup so I will set this service to manually start.

Only other thing it could be would be the Adobe Genuine Software Monitoring Service that I disabled as well.

Yes, running servers is known to interfere with OAuth authentication, e.g. see

https://support.mozilla.org/en-US/questions/1373706?page=2