Gmail two step verification

OS Mail unable to login to Gmail account with two step verification active, password not recognized.

Using app password generated by Google account and then setting this first in Mail/Preferences/Edit SMTP Server list. It appears that Mail/Accounts has an issue with the app password not being recognized. Howver it recognises the Gmail account password but times out with a blank dialogue box screen with only an option to cancel.

Any ideas how to resolve?

Thanks