We have migrated a few mailboxes from Exchange 2007 to Office 365. Everything seems to be working good, except when the migrated users send emails to a few of mailboxes that are still "on-premise" they receive an NDR. In doing a search, I saw an article that mentioned changing the domain in the Exchange admin console from Authoritative to Internal Relay ( http://community.office365.com/themes/groups/generic/forums/thread.aspx?ForumID=158&ForumThreadID=151580&ForumPostID=424801&PermaPostID=424801&ContentTypeID=1&GroupKeys=en-us/#424801 ) I've done that and am getting the same results?
Additional information, the user is NOT being synced with DirSync as there are some mailboxes we do not plan on migrating once we go live. I'm not sure if this matters or not but wanted to add this information in case it was relevent.
Thanks!