Hi,

The issue can occur if Office 365 Desktop didn’t set up properly.

To fix the issue, I suggest running Office 365 desktop setup.

To run Office 365 desktop setup, on the Office 365 portal, on the Admin page, under Resources in the right pane, click Downloads. Once at the Downloads page, under Set up and configure your Office desktop apps, click Set up.

After setting up it, please sign in the computer with your Office 365 account again.

If it still fails to sign in, you can manually configure Lync 2010 for those users. You can do this by modifying the following Office Communicator registry settings for each provisioned user under HKEY_CURRENT_USER\Software\Microsoft\Shared\UcClient:
• Set ServerSipUri to a string value of the user’s SIP proxy address
• Set ConfigurationMode to a dword value of 0
• Delete the ServerAddressInternal string
• Delete the ServerAddressExternal string
• Delete the ServerUserName string

After finishing it, please restart the computer and sign in Lync Client again.

Thanks,
Monica Tong