Outlook 2007 Not Connecting to Office365

I had a couple of users yesterday that have Office 2007 Standard SP3 on their computers and they couldn't setup their office365 account.

I checked the software requierements for office365 where Microsoft Office 2007 SP3 is listed. I had automatic updates enabled and there were no pending updates.

When the user tried to setup their account the credentials used were not accepted. The user was able to login to office365 portal though.

As is turns out there is a necessary update, kb2687404, that has to be installed if not installed automatically.

The updated states to fix a problem with expired passwords but fixed the issue for me. I also checked on other two machines with a fresh install of Microsoft Windows and  Microsoft Office with Service Pack 3.

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