Hello,
we noticed the same issue couple of weeks ago. Today we managed to establish modern authentication via Capsule Workspace on a test environment running R81.20 (it was upgraded from R81.10). I am not comfortable with upgrading production environment to a version that is not "widely recommended" just yet.
I have followed the steps in provided documentation. Be careful on the following 2 settings:
- "use specific domain" setting must be in form "yourdomain.onmicrosoft.com" as already stated in this thread
- Office365ClientSecret must be entered in obfuscated form by using "obfuscate_password" command
But in my case it started to work after when I removed the Capsule Workspace Site ID from my phone and recreate a new one with identical parameters. Only sign-out/sign-in was not enough.
After entering initial credentials to login into Capsule Workspace, I immediately received a form to connect to "Exchange Online":
After clicking "Sign in with Microsoft" button, it redirects me to O365 web portal to enter credentials. After that the login is successful and I can normally receive and send emails. Works perfectly on both IOS and Android.
Another thing I noticed is that in Log Server I do not see any logged attempt of this access (not even Accept) - that is because Workspace app is communicating directly with O365, not via gateway.
Hope that helps. If it does not work in your production environment, try setting up the test environment - there you have a bit more flexibility on changing settings.