Exchange 2003 quota setup

I have set up quotas in the Mailbox Store properties. The quotas that have been set up are not controlling the size of mailboxes. I have since read that there needs to be a policy set up to set up quotas properly. I created a policy in the system policies folder as a size quota policy. It has no values yet and the checkboxes for Issue Warning, Prohibit Send and Prohibit send and receive have not been checked. So it has not yet been engaged.
First question - is that correct about how to implement a quota using a policy?
Second question - If a policy is set up for lets say 500mb and some of the users have bigger mail boxes than that say like 750mb to 1000mb, what happens to their mail after the quota has been engaged?
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You can setup quotas on the store on the user object itself. The system policies are just a way to ensure the settings across several stores or servers, but it's not required.

It is important that the users are configured to use the mailbox store's default limit (which is the default setting).

Nothing happens to mail that already exceeds the quota (nothing gets deleted or anything), but whatever limit they have reached will apply immidiately, so if Prohibit Send & receive is set to 500MB would cause a 750MB mailbox to refuse new e-mails as soon as the quota becomes active, so I'd be careful or some people might get really mad.

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