Microsoft Dynamics CRM Outlook Client fails to configure if you are using App Passwords for authentication

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This article introduces an issue that There is a problem communicating with the Microsoft Dynamics CRM server this error may occur when you try to set up Microsoft Dynamics CRM for Office Outlook by using App Passwords for authentication.

Applies to:   Microsoft Dynamics CRM 2013
Original KB number:   2933267

Symptoms

When you attempt to configure Microsoft Dynamics CRM for Office Outlook by using App Passwords for authentication, you receive the following error message:

There is a problem communicating with the Microsoft Dynamics CRM server. The server might be unavailable. Try again later. If the problem persists, contact your system administrator.

Cause

Multi-factor authentication is only supported with Microsoft Dynamics CRM for Office Outlook 2015 and later. For more information, see Enable multi-factor authentication through OAuth.

More information

If you view the error details, the following stack trace appears:

The remote server returned an error: (400) Bad Request.
at System.Net.HttpWebRequest.GetResponse()
at Microsoft.Crm.Outlook.ClientAuth.ClaimsBasedAuthProvider`1.MakeHttpPostRequest(Uri postUri, String postData)
at Microsoft.Crm.Outlook.ClientAuth.PassportAuthProvider`1.SignIn()
at Microsoft.Crm.Outlook.ClientAuth.ClientAuthProvidersFactory`1.SignIn(Uri endPoint, Credential credentials, AuthUIMode uiMode, IClientOrganizationContext context, Form parentWindow, Boolean retryOnError)
at Microsoft.Crm.Outlook.ClientAuth.ClientAuthProvidersFactory`1.GetAuthProvider(Uri endPoint, Credential credentials, AuthUIMode uiMode, Uri webEndPoint, IClientOrganizationContext context, Form parentWindow)
at Microsoft.Crm.Application.Outlook.Config.ServerInfo.LoadUserId()
at Microsoft.Crm.Application.Outlook.Config.ServerInfo.Initialize(Uri discoveryUri, OrganizationDetail selectedOrg, String displayName, Boolean isPrimary)
at Microsoft.Crm.Application.Outlook.Config.ServerForm.LoadDataToServerInfo()
at Microsoft.Crm.Application.Outlook.Config.ServerForm.<InitializeBackgroundWorkers>b__2(Object sender, DoWorkEventArgs e)
at System.ComponentModel.BackgroundWorker.OnDoWork(DoWorkEventArgs e)
at System.ComponentModel.BackgroundWorker.WorkerThreadStart(Object argument)

For more information on the App Passwords feature available with Multi-Factor authentication, see the following articles: