Redeem Office 365 subscription via product key- ERR_SUBSCIPTION_PROVISIONING_FAILED if I previously bought subscription for App Store

You are correct - I've seen this and Office/Microsoft 365 subscription through App Store cannot be mixed with a retail product key.

In this case, you have two choices:

1. Wait for subscription to expire and make sure auto-renewal of subscription is cancelled. Then activate the key using Microsoft account
2. Contact Microsoft and ask for escalation team to fix this if the frontline rep does not understand the issue since they may not be familiar with supporting Apple products

Crynay's first response is why. You can't activate two different 365 accounts under the same MS account. You'll have to wait until the first one expires (make sure it isn't set to auto renew), then activate the gifted subscription.