Just wanted spread the word for those that have been banging their heads on the keyboard with trying to use Smartcard authentication with Outlook 2016. Microsoft recently released an update for Outlook 2016 then enables this functionality that we enjoyed with previous versions. There is a two stage process here to resolve this problem.
Step One: Obtain the patch from the Download Center.
As a reminder if you're not sure which version of Outlook you have, click File > Office Account > About Outlook. Listed after the build number is either 32-Bit or 64-Bit
Step Two: Add a couple registry values in HKCU
1) Open the registry editor (typical disclaimer for manipulating the registry applies here; Use Caution!)
2) Navigate to HKEY_CURRENT_USER\Software\Microsoft\Exchange
3) Add a new DWORD with a name of AlwaysUseLegacyAuthForAutodiscover with a value of 1
4) Navigate to HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\Outlook\RPC
5) Add a new DWORD with a name of EnableSmartCard with a value of 1
Note: In previous versions of Outlook MSOAuthDisabled was used as well, however this key no longer functions with Outlook 2016
<contents for your very own .reg>
Windows Registry Editor Version 5.00
</contents for your very own .reg>
I would recommend, if applicable to use Group Policy Preferences to push these settings out to the masses.
Good Luck and enjoy your Smartcard enabled Outlook 2016 🙂