Infusion does not support Multi Factor Authentication (or two factor authentication) for Emails (MFA) or 2FA
The following is from the Chilkat website (the DLL we use)
smtp.office365.com: If SMTP authentication fails for your smtp.office365.com account, it may be that your account is configured to require MFA (multi-factor authentication). You may need to change settings to allow for legacy authentication (single-factor auth) See Here
Also, an app password may be required. see here
The Chilkat socket component/library provides a high-level, easy-to-use API for TCP/IP socket programming. It supports creating secure channels w/ TLS 1.2, 1.1, 1.0, and SSL 3.0. Both client-side and server-side SSL/TLS is supported,
Lastly ensure that the Use TLS tick box is selected in Infusion Email Defaults.