All I can share is that I use normal password authentication for smtp server. You might try that instead of OAUTH2. But that's just my experience.

Thank you. Tried that - still N/G here is the same error again.

Sending of the message failed. Unable to authenticate to Outgoing server (SMTP) smtp.office365.com. Please check the password and verify the 'Authentication method' in 'Account Settings | Outgoing server (SMTP)'.

I am having the problem ONLY on the new account I created, my two older ones are working fine.

OAuth2 is the correct authentication for O365 accounts, 'normal password' is correct for consumer outlook.com, hotmail etc. accounts (even though both types use smtp.office365.com). If it's a consumer account, an app password is required if two-step verification is set for the account. Also, check that the account is sending on the smtp with the same User Name, not another smtp.office365.com with a different User Name (select the account in the left pane of Account Settings, inspect the Outgoing Server (SMTP) in the right pane).

Thank you the user names match, still n/g

The OAuth bug appears to still affect some users:

https://bugzilla.mozilla.org/show_bug.cgi?id=1810760#c103

but your issue might be related to other factors. What is the rest of the setup, such as antivirus, VPN etc.?

Any idea when the OAuth error will be fixed. As stated earlier this is only happening with the new email. I have two other 365 and a google that work fine. I did delete and re-created numerous times, didn't fix.

Hard to say when it will be fixed, but I expect it's a rather high priority. In order to test if there's something in the current profile that is interfering, I suggest trying to add the account in a new profile, as I recall there was some evidence for this in a bug report. Help/More Troubleshooting, about:profiles, to create a new profile. The current profile is unaffected and can be launched independently.

Thank you for the suggestion - may try when time permits. I do LOVE Thunderbird, have had for years. I know they work very hard on these- is there a certain page I can visit to check on progress? Thank you again for your input -it is truly appreciated.

Update- I tried creating an independent additional profile with the one email that was not working with my old profile. This did not work - still could not send emails. I have emails with GODaddy so I therefore used their smpout to send email with this new email instead of the office365 smpout. This works!! I am thrilled that I can stay with Thunderbird and a little disappointed in myself for not thinking of this sooner. Life is a lesson! Again. TY for your assistance.