Blackberry Server issue -  user not started

Trying to activate 3 users on a Blackberry server running on a 2003 St box connecting to Exchange 2007 running on SBS 2008.

Getting User Not Started error in event logs. When servics are stop and user does the activation he gets the activation email in the inbox. I restarted the BB services and check logs. Please see below and advise

[30000] (11/30 11:39:55.852):{0x1BC8} [DIAG] EVENT=Register_thread, THREADID=0x1BC8, THREADNAME="StarterThread"
[30041] (11/30 11:39:55.852):{0x1BC8} Starting handheld for Dustin Hobbs
[40704] (11/30 11:39:55.852):{0x1BC8} MAPIMailbox::MAPIMailbox(2) ServerDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Configuration/cn=Servers/cn=SVR-SBS08-DC01/cn=Microsoft Private MDB, MailboxDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=dustin
[30000] (11/30 11:39:55.852):{0x1A44} [DIAG] EVENT=Register_thread, THREADID=0x1A44, THREADNAME="StarterThread"
[30041] (11/30 11:39:55.852):{0x1A44} Starting handheld for Stacey Ward
[40704] (11/30 11:39:55.852):{0x1A44} MAPIMailbox::MAPIMailbox(2) ServerDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Configuration/cn=Servers/cn=SVR-SBS08-DC01/cn=Microsoft Private MDB, MailboxDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=Stacey
[30000] (11/30 11:39:55.852):{0x1278} [DIAG] EVENT=Register_thread, THREADID=0x1278, THREADNAME="StarterThread"
[30041] (11/30 11:39:55.852):{0x1278} Starting handheld for Susan DeMars
[40704] (11/30 11:39:55.852):{0x1278} MAPIMailbox::MAPIMailbox(2) ServerDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Configuration/cn=Servers/cn=SVR-SBS08-DC01/cn=Microsoft Private MDB, MailboxDN=/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=Susan
[30000] (11/30 11:39:55.852):{0x14C4} [DIAG] EVENT=Register_thread, THREADID=0x14C4, THREADNAME="StarterThread"
[30000] (11/30 11:39:55.852):{0x1D14} [DIAG] EVENT=Register_thread, THREADID=0x1D14, THREADNAME="StarterThread"
[50000] (11/30 11:39:55.852):{0x1EC4} Controller: This BES Agent is under control of BlackBerry Agent Controller
[40739] (11/30 11:39:55.852):{0x1BC8} MAPIMailbox::MAPIMailbox(2) - ResolveName[1] success for DisplayName='/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=dustin'
[40739] (11/30 11:39:55.852):{0x1A44} MAPIMailbox::MAPIMailbox(2) - ResolveName[1] success for DisplayName='/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=Stacey'
[40739] (11/30 11:39:55.852):{0x1278} MAPIMailbox::MAPIMailbox(2) - ResolveName[1] success for DisplayName='/o=First Organization/ou=Exchange Administrative Group (FYDIBOHF23SPDLT)/cn=Recipients/cn=Susan'
[40204] (11/30 11:39:55.867):{0x1BC8} MailboxManager::GetMailboxSession - Using MAPI profile 'BlackBerryServer'
[40430] (11/30 11:39:55.867):{0x1BC8} {dustin@cmba.com} MAPIMailbox::MAPIMailbox(2) - Mailbox opened on session 0x01332618 (SVR-SBS08-DC01)
[40430] (11/30 11:39:55.867):{0x1A44} {Stacey@cmba.com} MAPIMailbox::MAPIMailbox(2) - Mailbox opened on session 0x01332618 (SVR-SBS08-DC01)
[40430] (11/30 11:39:55.867):{0x1278} {Susan@cmba.com} MAPIMailbox::MAPIMailbox(2) - Mailbox opened on session 0x01332618 (SVR-SBS08-DC01)
[20265] (11/30 11:39:55.883):{0x1BC8} {dustin@cmba.com} MAPIMailbox::CreateSearchFolder - Open folder failed (0x80070005) failed
[20265] (11/30 11:39:55.883):{0x1A44} {Stacey@cmba.com} MAPIMailbox::CreateSearchFolder - Open folder failed (0x80070005) failed
[20265] (11/30 11:39:55.883):{0x1278} {Susan@cmba.com} MAPIMailbox::CreateSearchFolder - Open folder failed (0x80070005) failed
[20154] (11/30 11:39:55.883):{0x1A44} User Stacey Ward not started
[20154] (11/30 11:39:55.883):{0x1278} User Susan DeMars not started
[40205] (11/30 11:39:55.883):{0x1BC8} MailboxManager::CloseMailboxSession - closing session
[20154] (11/30 11:39:55.883):{0x1BC8} User Dustin Hobbs not started
[30362] (11/30 11:39:56.352):{0x1294} This agent will handle 3 user(s)
[30000] (11/30 11:39:56.352):{0x1294} Optimize ThreadPools, total number of started users 0
[40413] (11/30 11:39:56.352):{0x1294} Before optimization: total number of worker threads 0, where 0 non-removable
[40417] (11/30 11:39:56.352):{0x1294} After optimization: total number of worker threads 0, where 0 non-removable
[40748] (11/30 11:39:56.352):{0x1294} License total: 3
[30050] (11/30 11:39:56.352):{0x1294} All handhelds started
[50079] (11/30 11:39:56.352):{0x1294} 3 user(s) failed to initialize
[30000] (11/30 11:39:56.352):{0x1E00} [DIAG] EVENT=Register_thread, THREADID=0x1E00, THREADNAME="TimerHealth"
[40000] (11/30 11:40:55.853):{0x1B64} [BIPP] Ping 0 sent
[40000] (11/30 11:40:55.853):{0x1F0C} [BIPP] PingResponse 0 received
[40000] (11/30 11:41:55.855):{0x1B64} [BIPP] Ping 1 sent
[40000] (11/30 11:41:55.855):{0x1F0C} [BIPP] PingResponse 1 received
[40000] (11/30 11:42:55.856):{0x1B64} [BIPP] Ping 2 sent
[40000] (11/30 11:42:55.856):{0x1F0C} [BIPP] PingResponse 2 received
[40000] (11/30 11:43:55.858):{0x1B64} [BIPP] Ping 3 sent
[40000] (11/30 11:43:55.858):{0x1F0C} [BIPP] PingResponse 3 received
[40000] (11/30 11:44:55.859):{0x1B64} [BIPP] Ping 4 sent
[40000] (11/30 11:44:55.859):{0x1F0C} [BIPP] PingResponse 4 received
[40000] (11/30 11:45:55.861):{0x1B64} [BIPP] Ping 5 sent
[40000] (11/30 11:45:55.861):{0x1F0C} [BIPP] PingResponse 5 received
[40000] (11/30 11:46:55.862):{0x1B64} [BIPP] Ping 6 sent
[40000] (11/30 11:46:55.862):{0x1F0C} [BIPP] PingResponse 6 received
[40000] (11/30 11:47:55.864):{0x1B64} [BIPP] Ping 7 sent
[40000] (11/30 11:47:55.864):{0x1F0C} [BIPP] PingResponse 7 received
[40000] (11/30 11:48:55.865):{0x1B64} [BIPP] Ping 8 sent
[40000] (11/30 11:48:55.865):{0x1F0C} [BIPP] PingResponse 8 received
[30181] (11/30 11:49:55.851):{0x1174} Performing system health check (BlackBerry Mailbox Agent 1 - BESX Version 4.1.4.40)
[40360] (11/30 11:49:55.851):{0x1174} [BIPPa] Health: QSize=0, intMap=0
[40000] (11/30 11:49:55.867):{0x1B64} [BIPP] Ping 9 sent
[40000] (11/30 11:49:55.867):{0x1F0C} [BIPP] PingResponse 9 received

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