Along with what Joseph mentioned, I would try using an SMTP account that doesn't have MFA enabled on it, to send the Workflow emails through, via the Workflow Setup window.
As per the following blog, "Workflow email functionality is not designed to handle multi-factor or dual authentication when sending emails out. Usually we would require the usage of App Passwords, but the password field in the Workflow Setup window only allows 15 characters and most App Passwords are 16 characters or longer, thus they won't fit, and won't authenticate, so the email will fail to send out."
community.dynamics.com/.../workflow-notification-email-troubleshooting
This has not changed in GP 18.2/18.3 neither, even though the password fields were increased for 21 characters, the Workflow Setup window was not, hence you'd run into the same issue with app passwords being 16+ characters, getting cut off, keeping the authentication from happening.
It is interesting the TEST emails will send out though, and not the actual Workflow emails. It may be worth also going through the above blog which has other troubleshooting steps for Workflow emailings.
Thanks
