I have to wonder if oyu missed the notice requiring you to use oauth2.0 as authentication instead of "Normal passord" or two factor authentication. It applies to outgoing mail as well as incoming and those used to Microsoft generally assume the same password setting will be used for incoming and outgoing. Thunderbird does not do that. So check the outgoing server (SMTP) entries in your account settings are configured for the appropriate authentication method.

Matt it was hotmail. The setting does not accept oauth2 but office365 does. I always used the same password for years but now got "enter new password" with wrong user or password at least 20 time although it worked on outlook server. I then changed my password in outlook but got the same message. I then went to thunderbird passwords and removed password which was the original. Thunderbird now had no password so I entered new password when it said enter new password save in passwords. It accepted on the hotmail server and it is now fine and I can send emails again The server settings are starttl normal password is used for hotmail or outlook not office365.