This error appears when CRM cannot connect to the outbound SMTP mail server. For Exchange Online, you'll need to enable SMTP authentication in Microsoft 365 before configuring email settings in CRM.
Complete the Microsoft Connectors setup described in Access CRM: Integrating with Microsoft Connectors using OAuth2 for email before configuring email settings in CRM for Exchange Online.
To send emails from CRM, you’ll first need to enable SMTP authentication for that email address in your Microsoft 365 admin center. Otherwise, Microsoft 365 will block requests to the SMTP server.
To get started
1. Open the Active users tab in your Microsoft 365 admin center.
2. Open the admin center or expand the hamburger icon in the top-left corner of the admin center and go to Users - Active users.
3. Click on the email account that you want to use to send email which will expand a slide-out with more options.
4. In the slide-out, go to the Mail tab.
5. Click the Manage email apps option.
6. Check the box for Authenticated SMTP in the list of options.
7. Click the Save changes button at the bottom.
And that’s it! You’re done working in the Microsoft 365 admin center – you can now configure the system emails settings from CRM.