Joe thanks for the screenshot above. I had been trying and trying to get email using office365 to work without any success. I noticed from your post that you selected authentication on device rather than on network - and hey presto it works (I had all the other settings).
Thanks and posting in case anyone else has a similar problem. None of the other solutions I found online worked.
I do not understand why xerox do not go through these settings in detail in their documentation. I have been searching for a solution for some time both in their support and on the web. I now have two colour xerox laser mfp's but will not purchase xerox again. They are currently too difficult to configure. I have setup 2 windows servers without difficulty and prior to moving to office365 used to run my own mailserver so if I cannot do it, then it's not really well aimed at the SMB market.