It means you need to use OAUTH2 in server setup. That message from Microsof should have included this link: https://support.microsoft.com/en-us/office/modern-authentication-methods-now-needed-to-continue-syncing-outlook-email-in-non-microsoft-email-apps-c5d65390-9676-4763-b41f-d7986499a90d

OAuth2 is not available in the drop down menu for outgoing server. Is this because I am using pop mail not IMAP?

Can you post a screenshot of your SMTP server settings pane?

Here are the settings for the SMTP server. BUT currently configured as pop not imap

the microsoft instruction screen stated to use smtp.office365.com

If I change it to smtp.office365.com there is still no OAuth2 in the drop down menu. However, I am using pop mail not imap. Is there where the problem arises?

If I change to smtp.office365.com OAuth2 still does not appear. I am using POP mail not IMAP - is there where the problem is?

Why are responses being moderated?

Because every now and then, there is a user who insults, curses, and writes in an inflammatory nature. There are also a few of Thunderbird senior staff who periodically check in and review problems to take back to developers, or to advise when reported problem is being addressed. And sometimes they pass on tips to me on other options in resolving problems. It's really a win/win.

Let me try the answer this way. When I change the serving to smtp-office365-com I get the same problem - no OAuth2 in the drop down list. I am using POP mail account not an IMAP account. Is this were the problem resides?

POP is not the issue. I acknowledge that the setting isn't instantaneous. Try setting as I suggested, click OK, and then click Edit, and see if the Oauth2 option appears.

Yes - that worked. It seems there is a need to close the setting and then edit them again to get OAuth2.

Thank you for your help

You are very welcome