After a Windows Small Business Server 2011 Essentials (SBS 2011 Essentials) user resets the password for their user account, the user either can't sign in to SBS 2011 Essentials Active Directory or can't sign in to Office 365 resources.
When the user tries to sign in to Office 365, authentication may fail, and they may get the following error message:
We don't recognize this user ID or password.
However, the user can still sign in to the desired resources by using their old password.
This issue can occur for one or more of the following reasons:
The password change isn't yet synced to Office 365. It may take 15 minutes for the Microsoft Office 365 Integration Module (OIM) for SBS 2011 Essentials to sync the password change to Office 365.
The password reset in Active Directory doesn't comply with Office 365 password policy. Therefore, the password change can't be synced to the user ID.
The password was changed in the Office 365 portal or by using Microsoft Azure Active Directory Module for Windows PowerShell. However, the password wasn't changed in SBS 2011 Essentials.
Password synchronization from the OIM for SBS 2011 Essentials to Office 365 isn't working.
To resolve this issue, use one or more of the following methods, as appropriate for your situation.
Note The OIM may take 15 minutes to sync user-account password changes to Office 365. Before you try any of these methods, wait at least 15 minutes after the user's password is changed to make sure that logon failure is not caused by this expected behavior.
Method 1: Reset the password in SBS 2011 Essentials instead of in Office 365
Make sure that all password changes that are made by SBS 2011 Essentials users are performed only on the on-premises Active Directory user account. If this isn't the case, have the user reset the password for their on-premises Active Directory user account, and then wait 15 minutes for the changes to sync to Office 365.
Note: Make sure that password resets comply with the Office 365 password policy. For the latest Office 365 password policy information, go to the following Microsoft website
Microsoft Azure cloud services, Microsoft Azure Active Directory, Microsoft Office 365, Microsoft Intune, CRM Online via Office 365 E Plans, Microsoft Azure Recovery Services, Windows Small Business Server 2011 Essentials, Office 365 Identity Management