To add to the mystery surrounding this. I am also getting the issue, however it only affects one of the users on my nextcloud server:
User 1 - Primary User, Admin, Cannot Sync
User 2 - Secondary User, Non-Admin, Can Sync
All other settings are the same, using app-specific passwords, TOTP enabled, Nextcloud 14.0.0
Edit: Getting the error on Linux and Android for User 1, haven't tried on Windows. No errors for User 2 on Linux and Android.