The important things are that 1. The SMTP sever is the one actually used. (check it against the account in the Account name entry above server settings in the account dialog). If you have more than one :identity" for that account check each. Clicking the identity button will show either one or more identities in a list.) 2. The SMTP server is set to require a password in settings. (check in outgoing server SMTP) that the authentication is set to password or oauth2.0.) If it is oAuth, post back. Other rules apply there as the "token" is in the password manager not the password and it has to be deleted to "reactivate" the password request.

Have you modified Thunderbird default cache and cookie policy? for oauth, they need to be enabled. And sometime to restart in safe mode from the help menu as some add-on is suppressing the password dialog. This is usually an out of date add-on, but it might just be one with a bug.