I added the Office 365 LTI shortly after it was released, but I confess I haven't used it much as we mostly use Google Drive. (We have both services active.)
I'm doing some testing now and am having issues with students being able to access Office 365 assignments and the Office 365 OneDrive in the left column. A login button appears, but once clicked, nothing happens. The same screen appears with the login button.
EDIT: I was testing this as a student on an iPad, which is the student one-to-one device we use. I do see that a pop-up appears on desktop. Is there a way to make this work in the Canvas app?