401 Unauthorized exception occurs in Dynamics 365 when using Server-Side Synchronization


Symptoms


When using Server-Side Synchronization in Dynamics 365, you encounter one of the following errors:
  • The email message "Test Message" cannot be sent. Make sure that the credentials specified in the mailbox <Mailbox Name> are correct and have sufficient permissions for sending email. Then, enable the mailbox for email processing.
  • Appointments, contacts, and tasks can't be synchronized. Make sure that the credentials specified in the mailbox <Mailbox Name> are correct and have sufficient permissions. Then, enable the mailbox for appointments, contacts, and tasks synchronization.
  • Email cannot be received for the mailbox <Mailbox Name>. Make sure that the credentials specified in the mailbox are correct and have sufficient permissions for receiving email. Then, enable the mailbox for email processing.
The message also includes the following error code:

Email Server Error Code: Http server returned 401 Unauthorized exception.


Cause


These errors can occur for one of the following reasons:

  1. The e-mail address of the mailbox record in Dynamics 365 does not match the e-mail address of the mailbox in Exchange.
  2. If you are using Dynamics 365 (online) with Exchange Online, this error can occur if you are using an Exchange Server (Hybrid) profile even though the user's mailbox is located in Exchange Online.
  3. If you are using Dynamics 365 with Exchange Online, this error can occur if the user does not have an Exchange Online license. 
  4. If you are using Dynamics 365 (online) with Exchange Online, this error can occur if your Dynamics 365 subscription is not in the same Office 365 tenant as your Exchange Online subscription. When using an Exchange Online email server profile, Dynamics 365 (online) and Exchange Online need to be in the same Office 365 account/tenant.
  5. If you are using Dynamics 365 (online) with Exchange on-premises, this error can occur if Basic authentication is not enabled for EWS (Exchange Web Services).



Resolution


  1. Verify the e-mail address of the mailbox record in Dynamics 365 matches the e-mail address in Exchange. The error includes a link to the mailbox record in Dynamics 365. You can use this link to quickly verify the Email Address field.
  2. If you are using Dynamics 365 (online) with Exchange Online, make sure you are using an Exchange Online email server profile. Only use an Exchange Server (Hybrid) profile for users that have mailboxes in Exchange on-premises. 
  3. If you are using Dynamics 365 with Exchange Online, verify the user has an Exchange Online license. For additional information on assigning licenses in Office 365, see Assign or remove licenses for Office 365 for business.
  4. If you are using Dynamics 365 (online) with Exchange Online, verify Dynamics 365 (online) and Exchange Online are in the same Office 365 account/tenant.
  5. If you are using Dynamics 365 (online) with Exchange on-premises, verify Basic authentication is enabled for EWS (Exchange Web Services).  For more information, see the Prerequisites section of Connect Dynamics 365 (online) to Exchange Server (on-premises).