I created a Microsoft 365 Developer subscription (E5) today morning and used it to send a test email using the following settings
using (SmtpClient client = new SmtpClient())
{
client.EnableSsl = true;
client.UseDefaultCredentials = false;
client.Credentials = new NetworkCredential(username, password);
client.Host = "smtp.office365.com";
client.Port = 587;
client.DeliveryMethod = SmtpDeliveryMethod.Network;
client.Send(msg);
}
It did not work in the beginning, as I kept getting this error message with the exception thrown by this code. Then, I spent about 4+ hours playing with the Microsoft 365 admin centre settings and reading articles to figure out the issue. Ultimately I changed my Microsoft 365 admin centre password and it worked like a charm. So, it is worth to try changing the password when you get this message, before thinking about any advance solution.
Note that the password wasn't invalid for sure as I logged on to my Microsoft 365 account without any issues. however, the password change solved the issue.