A workaround has been identified by turning off the Thunderbird option "Show only subscribed folders".
To turn off this option;
- Right click the account in the folder pane.
- Select the menu entry Settings
- In the server settings for the account,select the advanced button.
- In the advanced account settings dialog, un-check the option "Show only subscribed folders"
Microsoft have now acknowledged the issue as EX41924 and are posting updates here. At the time of writing this post the latest update (update 4) is suggesting a code solution has been developed and is currently being deployed across the office365 and outlook.com web sites to remediate the failure their previous patch caused.Affected users that wish to follow the Microsoft support thread on community.office365.com can find it here.
While it is unfortunate, there is nothing the Thunderbird community can do in this other than offer the workaround until such time as Microsoft resume normal services.