Had similar issue multiple times, the fact that CF highlights the "Smtp server" box in red make it a bit misleading.
According to SparkPost documentation, that error is:
Improperly Configured Sending Domain
If you receive the following error message 550 5.7.1 Unconfigured Sending Domain as a response when sending a transmission, it is because you used a from address whose domain is not one of the sending domains that you created in your account.
Thus, you got two choices, change your sending from address (on Clickfunnels) to match the domain name you verified in SparkPost, or verify the domain you want to be sending from (on SparkPost).
In many cases I used to add a domain name like this (mail.mydomain.com) to Sparkpost, and then in Clickfunnels my plan was to send emails from (mydomain.com) NOT (mail.mydomain.com)...In order to fix that, I had to add (mydomain.com) to my sparkpost account, without verifying the bounce CNAME (as you are limited to only a single CNAME per domain) I create a new subdomain for bounces (bounce.mydomain.com)...
That's really it,