Sprout Forms Notifications to Office 365 address failing
This error could be caused by the relationship between the user used in your SMTP Email settings in Craft and the From Address set in your Form notification. Some Mail Servers don't allow the sender (From Address) to be different from the SMTP user. Can you confirm if your From Address is the same email address in your SMTP settings?

Additionally, you may want to update your SMTP settings to use Mandrill or Mailgun. Those services make it pretty easy to look at your sent mail and see if it's being delivered and can provide more insight into what is happening if it is not being delivered.