How to generate App Password for Microsoft 365 Admin account ?Need guidance for SMTP authentication

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Based on my research and the screenshot you provided regarding "Conditional Access," here is the situation: By default, users cannot create app passwords. This feature is often disabled by modern security policies and must be explicitly enabled in the legacy service settings before users can utilize them. 

I have just performed this on my test environment to confirm the workflow. As an Admin, you need to complete the following steps to give users the ability to create app passwords: 

Step 1: Enable App Passwords in Service Settings 

1. Sign in to the Microsoft Entra admin center (as at least an Authentication Policy Administrator or Global Admin). 

2. Browse to Conditional Access > Named locations > Select "Configure MFA trusted IPs" 

3. On the Multifactor authentication page that opens, click on Service settings. 

Under the app passwords section, select the checkbox: Allow users to create app passwords to sign in to non-browser apps.  

Tip: If it is already checked, please uncheck it, save, and then check it again to ensure the setting applies correctly. 

Reference: Allow users to create app passwords

Step 2: Enforce MFA for the User 

1. After saving the settings in Step 1, switch to the Users tab on that same page. 

2. Select the Admin account you want to generate the password for. 

3. Click Enable MFA. 

4. Once the status changes to Enabled, click on the user again and select Enforce MFA. 

5. Ensure the status specifically reads enforced.

Step 3: Generate the Password 

1. Go back to the My Sign-ins / Security Info page for that account. 

2. Refresh the page. You should now see the App password option added to the "Add sign-in method" list. 

I hope this helps resolve the issue, or at least guides you in the right direction. If you have any concerns, questions, or if anything remains unclear, please feel free to reach out anytime. 

Best regards. 

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To generate an App Password for your Microsoft 365 admin account, you first need to ensure that the ability to create app passwords is enabled. By default, users cannot create app passwords unless this feature is activated by an admin. Here are the steps you can follow:

1. Sign in to the Microsoft Entra admin center as an Authentication Policy Administrator.
2. Navigate to Conditional Access > Named locations.
3. Select "Configure MFA trusted IPs" in the bar across the top of the Conditional Access | Named Locations window.
4. On the Multifactor authentication page, select the option to Allow users to create app passwords to sign in to non-browser apps.

Once this option is enabled, users will be prompted to create an app password during their initial registration for Microsoft Entra multifactor authentication. They can also create app passwords after registration.

If you still do not see the App Password option after following these steps, please ensure that your account has the necessary permissions and that the feature is enabled by your organization’s admin.

References:

• Enforce Microsoft Entra multifactor authentication with legacy applications using app passwords