Outbound Email Issue: .com.au Domain Unable to Send from UK-Hosted Sugar Instance

We have a customer with offices in both the UK and Australia. They have two Sugar instances (V 14.0.0 (Build 233) (Q2 2024)), both hosted in a UK data center. The UK CRM can send outbound emails without any issues. However, the Australian site, which uses a .com.au domain, is unable to send outbound emails and receives the error message: "The outbound mail server selected for the mail account you are using is invalid." Microsoft has been involved and confirmed that there are no issues on their end, suggesting the problem might be related to Sugar. Could Microsoft be blocking the connection because the O365 is hosted in Australia while the CRM instance is hosted in the UK? Any input on this issue would be greatly appreciated.

UK Sugar Instance

AUS Sugar Instance