I have knocked it on the head and gone with an O365 mail server. So unless you actually need Sendgrid for this process I'd use the alternative, it was pretty simple to do in the end.
We have exactly the same issue. I'm working with Sendgrid to find a solution, and it's going very slowly. It looks like they changed some settings without checking all the possibilities (the blight of I.T.). I have been told they are trying to work on removing the MFA on the account to enable processing, but I'm not sure that'll be possible unless they've factored it in, after all, why introduce an enhanced security measure that you can by-pass?? Frustrating in the extreme.
This question came up in regards to the Xerox AltaLink products when a customer began requiring 44 characters passwords to utilize Amazon SES email. On that product the character limit for passwords is 32 characters. I don't have your exact machine available to look at remotely, but I have a similar one. On that machine I counted the characters that I could enter in the password field before it stopped taking them and it was 64 characters. 32 and 64 character limits seem logical. This 69 character requirement seems unusual and not something that I would expect many manufacturers to plan for.
We utilize sendgrid for Scan to Email functionality and they have transitioned from basic authentication of username/password to api keys. Their API keys are 69 characters long. Talking with Send Grid they said Xerox can't accept the password and are working on a solution. Does anyone know what the max length for a SMTP password is?