Processes in Microsoft 365 for setting up Office apps, redeeming product keys, and activating licenses.
Watchguard XTM Fix:
Policy Manager>Setup>Actions>Proxies>HTTP-Client.1 (Or whatever your main one is named)>Edit>HTTP Request>Check "Allow range requests through unmodified"
Adding the *.Microsoft.com/* exception was not sufficient for me, still had the same problem...
~Kevin