A few weeks ago we started noticing an issue with CAML Designer when connecting to Office 365.
An error was generated in the logs and the user received a “your credentials are incorrect” notification. After some digging around — and creating a clean Azure VM to reproduce it (since it worked fine on our own machines) — we found the culprit.
The Cause
A DLL wasn’t found. Not because of CAML Designer itself, but because Microsoft.SharePoint.Client.Runtime.dll contains a relative reference to msoidcliL.dll — and that file was missing on the clean machine.
This was documented in a blog post by Tomasz Rabinski.
The Fix
Install the SharePoint Server 2013 Client Components SDK. Once installed, the missing msoidcliL.dll is present and the Office 365 connection works.
Caveat
This fix works for the CSOM connection method. The web service connection method to O365 still returns an authentication error. We’re still investigating that one — expect an update soon.