Can't authenticate with SMTP (but IMAP works) Microsoft 365 - vb.net

Question

I'm trying to create an 'automation#mydomain.com' email account, which will be used to send out email alerts from my code. Since the days of 'basic authentication' are done, I'm implementing this with 'modern authentication'. Everything is hosted in Microsoft 365. Authentication is using the latest MSAL. Email is handled using the recommended MailKit library.
The Code
This code is trying to do four things:
Read a certificate from a file.
Use that certificate to get an authentication token from Microsoft.
Test that token and the configuration by opening an IMAP connection to the desired inbox and reading out the number of messages inside.
Send an email.
Dim AuthCert = New X509Certificate2(CertPath, EmailSettings("AuthCertPassword"), X509KeyStorageFlags.PersistKeySet)
AuthClient = ConfidentialClientApplicationBuilder.Create(EmailSettings("ApplicationID")).
WithAuthority(AzureCloudInstance.AzurePublic, EmailSettings("TenantID")).
WithCertificate(AuthCert).
Build
Dim AuthResult = AuthClient.AcquireTokenForClient({"https://outlook.office365.com/.default"}).ExecuteAsync.Result
Dim EmailMessage As New MimeMessage
EmailMessage.From.Add(New MailboxAddress(Nothing, Config.EmailSenderAddress))
For Each R In Config.EmailRecipients
EmailMessage.To.Add(New MailboxAddress(Nothing, R))
Next
EmailMessage.Body = New TextPart("plain") With {.Text = Warning}
Using MailClient As New ImapClient
MailClient.Connect("outlook.office365.com", 993, SecureSocketOptions.SslOnConnect)
Log.WriteEntry($"Token length is: {AuthResult.AccessToken.Length}")
Dim Authentication As New SaslMechanismOAuth2(Config.EmailSenderAddress, AuthResult.AccessToken)
MailClient.Authenticate(Authentication)
MailClient.Inbox.Open(MailKit.FolderAccess.ReadOnly)
Log.WriteEntry($"IMAP worked. Inbox count is {MailClient.Inbox.Count}")
MailClient.Disconnect(True)
End Using
Using MailClient As New SmtpClient
MailClient.Connect("smtp.office365.com", 587, SecureSocketOptions.StartTls)
Dim Authentication As New SaslMechanismOAuth2(Config.EmailSenderAddress, AuthResult.AccessToken)
MailClient.Authenticate(Authentication)
MailClient.Send(EmailMessage)
MailClient.Disconnect(True)
End Using
The above code almost works.
Read certificate file ✔
Get a working authentication token ✔
Connect via IMAP to read number of emails in the inbox ✔
Send an email via SMTP ✖
The error message is:
MailKit.Security.AuthenticationException: 535: 5.7.3 Authentication unsuccessful [BN9PR03CA0500.namprd03.prod.outlook.com 2023-01-26T16:58:30.103Z 08DAFF3B69EFD03B]
It occurs on the line: MailClient.Authenticate(Authentication) in the Smtp section.
Note that this same exact authentication succeeded when used for IMAP.
The M365 Config
I have followed two Microsoft articles in setting up my cloud-side configuration. The first article is:
Authenticate an IMAP, POP or SMTP connection using OAuth
I have registered the application and given it the required API permissions:
I don't have to worry about the workings of SASL XOAUTH2 because the MailKit library implements that for me.
I have created the 'service principal' using the New-ServicePrincipal command (using the correct Object ID from the Enterprise Application node). And have run the Add-MailboxPermission command to grant that principal access to the mailbox.
I have also followed the steps from this article:
Enable or disable authenticated client SMTP submission (SMTP AUTH) in Exchange Online
SMTP Authorization is disabled at the organization level. But that setting has been overridden for this specific mailbox using the Set-CASMailbox command.
So, what am I missing?

Answer 1

It might be temporary server issue with Microsoft OAuth that is ongoing for several day now. Many many reports from ppl with different email clients report for the same issue. For example
https://support.emclient.com/index.php?/Knowledgebase/Article/View/256/7/cannot-send-emails-for-outlookcom-accounts---authentication-aborted