So i just got off the phone with support and was able to fix this with their help.

If you are like me, you watched the video and looked at the web pages, and cant find any OAUTH settings. This is for the cloud hosted one. There is a little window in the upper right that offers to switch to a service desk mailserver. This message box is badly worded. In order to enable oauth, you have to click this message box (switch and configure), and then go to the dropdown that says "other mail server" and o365 is in there. Then just login modern auth with the credentials of the service account you are using to send mail.

Picture of message box:

I also had to approve the application access on the azure side, but that will depend how you have set up your azure.

they should really have this in their documentation. I feel like cloud hosted is always not documented as well as onprem.