We have a hybrid Exchange setup. Last Thursday, a Mac Office 2011 user came to me, she was unable to log into her Outlook 2011. She kept getting the following error:
Mail could not be received at this time.
The server for account xxxxxxxxxxx returned the error "Logon failure: unknown user name or bad password." Your username/password or security settings may be incorrect. Would you like to try re-entering your password?
If she clicked YES, then it would end up going in an endless loop. We knew her credentials were fine because she could log into outlook.office365.com (OWA) without issue.
After hours of troubleshooting, I found a workaround. Use the following username syntax: \365domainname.onmicrosoft.com\username@username.com
I didn't think much of it until yesterday, four or five more Mac users came to me with the same exact issue. It isn't happening to the Mac users tied to the on-premise server, only the Mac users on the Office 365 Exchange server. I called Microsoft, spent at least an hour on the phone with them. The tech was not very nice to me, and refused to admit this was a known issue. Then, today I found out that another company that we do work with (also an Office 365 subscriber) is having the exact same issue. I can only believe at this point that Microsoft either changed something with the Office 365 service that caused this issue, or that all Mac users are receiving some type of update that is breaking the Outlook 2011 connection.
Any input would be greatly appreciated. I'm just happy that we found a workaround in the meantime.