There is definitely an issue with the API on the webmail Outlook setting side but Microsoft worked with me to at least get emails working from within QuickBooks....

Do this: 

Use other for setting up your email account and enter the following details:

smtp.office365.com

Port 587 and check SSL/TLS

Then try to send an invoice/estimate etc.

When you try to send, before selecting email, check the email later option.

You'll find that all of a sudden the email goes through once you enter your regular password (not an app password if you created one).

In Azure you can keep security defaults enabled and this method will still work, along with M-FA.  And once you send a document successfully you won't have to check the email later option for subsequent emails.  It's almost as if there is an issue in the code and that wakes it up to properly handle the request.