The solution is to delete the Authenticator app for MFA > turn on MFA for the user > setup Phone and email for MFA > Create an App Password > use the app password for the email password in the configuration.
When sending email in Sage the "Sending email" window appears and then one of these error message is triggered after a minute or two.
If the Security Defaults are enabled in Azure Active Directory this will force all users to enable MFA and this defaults to using the Microsoft Authenticator.
If you are an O365 Admin follow the below section in the link and performed these steps to disable Security Defaults from their the Azure AD > Properties.
Office 365 Portal
Enable Client SMTP submission on the licensed mailbox being used:
From Microsoft 365 Admin Center , go to Active Users and select the user.
Go to the Mail tab.
In the Email apps section, select Manage email apps.
Verify that the Authenticated SMTP setting is checked (enabled). Select Save changes.
Disable O365 MFA
Disable Multi-Factor Authentication (MFA) on the licensed mailbox being used:
In the Microsoft 365 Admin Center , in the left navigation menu, choose Users > Active users.
On the Active user's page, choose Multi-Factor Authentication.
On the Multi-Factor Authentication page, select the user and disable the Multi-Factor Authentication status.
Disable the Azure Security Defaults by toggling the Enable Security Defaults to No:
Sign in to the Azure portal as a Security administrator, Conditional Access administrator, or Global administrator.
Browse to Azure Active Directory > Properties.
Select Manage security defaults. Set the Enable security defaults to toggle to No.
Verify email now sends
Delete the MFA options in Outlook > and verify that you can send an email. (The Security Defaults is what forced users to set up MFA, No users had MFA enabled)
Re-enable Security Defaults and MFA for the user
Without MFA your organization could be vulnerable. Re-enable the security defaults in Azure portal > Azure AD > Properties > enable MFA on the user> setup the phone and email options (you will need 2 options) > Verify you can login with one of the MFA options > create an app password > apply the new password to his email settings.
Email settings after and verified working.
Other helpful links