Educated guess: You probably need a separate app password for Thunderbird. The app password will be different than the main account password. It may not be possible to get one (see below). 

Both McGill and the University of Waterloo moved their alumni, and probably student, email services to Microshaft (hotmail, outlook, live or whatever they are calling it this week) a while ago. I believe U of T did the same thing as I have a close friend with a U of T alumni email account. I know with gmail you need to generate an app password to use a mail client. This works fine as I do it in multiple places. Yahoo mail doesn't even allow it anymore unless you pay. I am not sure about regular outlook/hotmail/live accounts and the alumni services might be slightly different. And I know for sure you need an app password for a mail client if you are using Rogers email which is hosted / provided by Yahoo as I have successfully done it recently. 

So I suggest researching app passwords as your first line of enquiry. I am a little surprised you are able to successfully download via IMAP. This suggests that my educated guess might be off or partially off Microshaft haven't properly implemented the app password feature.