In this how-to article I am assuming that you have already setup/configured DirSync for Microsoft Office 365 and have found that the “stopped-extension-dll exception error” in the event viewer references an issue with the password of your sync/tenant account.
What can cause this?
The most common reason that I have found is that the account used to sync with the tenant has an expired password. By default, the passwords for tenant-based accounts expire every 90 days. This is controlled on the tenant side.
-The Tenant Side-
1. The first thing we need to do is log in to the Microsoft Office 365 portal with an administrator account.
2. Identify the account used to sync your on-premise AD accounts with the tenant and check the box.
3. On the right, you should see the reset password link; complete the required steps to reset the password.
-The On-Premise Side-
Now that your password is valid, we have to update it for DirSync via the Synchronization Service Manager.
1. Connect to your Windows Server that is running the Synchronization Service Manager and go to C:\Program Files\Windows Azure Active Directory Sync\SYNCBUS\Synchronization Service\UIShell\ and launch miisclient.exe.
2. Click the Management Agents button.
3. Right-click the Windows Azure Active Directory Connector and select Properties.
4. Click Connectivity in the left-hand pane and update the password.
5. Click OK. It might take a second or two to confirm.
6. Now test out the updated password by running a Delta Import Delta Sync on the Active Directory Connector, then the Windows Azure Active Directory Connector and to finish it off, an Export on the Windows Azure Active Directory Connector.
7. Jump back to the Operations tab and you should start seeing success in the status column.