Talk to your email provider. The error is from their server.

the service provider says this is not a problem at the server and we verified this by sending from another email client.

As 534 indicates a security problem when logging in, you could check password and security-settings.

EDIT You should also check that your firewall allows T-bird (version?) to communicate

I don't see any certificates or special info in the security tab. i can't find anywhere in thunderbird to check the password.

tools / options / security / passwords / saved passwords and show passwords

okay found the passwords list and the password is correct. looked int he list of allowed apps in the windows 10 firewall. don't know what app I am looking for there to check if thunderbird is allowed.

individual emails are going through but an email with a merged list or 52 email addresses is not going through although it shows up in the sent folder. Also shows up twice in the sent folder.

email with a merged list or 52 email addresses is not going through

You may have hit a limit imposed by your email provider. Talk to them.

Also shows up twice in the sent folder.

In Thunderbird account settings you can tell Thunderbird not to place a copy of sent messages to the Sent folder.

limit on emails is set to 200 at hosting account. does hotmail have a limit?

does hotmail have a limit?

You ask them.

so I finally heard from microsoft and hot mail does not allow emails to more than 10 persons at a time.

sounds like a cop out to me.