Norman, as I noted to Gaston, I did not previously use the client.UseDefaultCredential=true, I only added that in an attempt to get it to work. You can also see that the very next line of code sets the valid credentials which should be overriding the default setting anyway (regardless, I get the same error with or without the UseDefaultCredentials line).
Yes, this is used inside of Autocad in my addin as a way for users to request am activation code. We have used it for the last 5 years, with only a few users that end up not having the email sent, and no error is generated for those users.