btw, it would matter on what /e/ Version you run. The Mail app is a k9mail fork. The fork got updated in v1.2 to k9mail 6.2+ - so Oauth2 should work after v1.2. If it doesn’t it shouldn’t be due to Mail then.
The Advanced Privacy hide-my-ip (Tor) feature is controversial so I leave it off most of the time. But according to user thilo in the gitlab issue it is surprisingly not due to Tor, but a tracker-block that targets login.microsoftonline.com that hinders the Oauth2 flow to work:
… it seems like the tracker displayed as “Mobile Engagement” is blocking
login.microsoftonline.com
https://gitlab.e.foundation/e/backlog/-/issues/5855
If you want to keep tracking-blocker enabled, allow this (wrongly identified) tracker
… this is at least a (bad) case where functionality and tracking are closely coupled
that one tracker rule had quite some impact: