Exchange 2007 Mail enabled public folder not working after Exchange 2013 Hybrid

I have an Exchange 2007 environment with Hybrid Exchange 2013 and Office 365.  This is working so far just working through bugs and one of them is really getting to me.

We had prior to the Exchange 2013 installed and Hybrid config a public folder which was receiving emails now it no longer receives emails, but only externally.  Internally you can send an email to the public folder.  I have checked the permissions and they seem intact.

Email Bounce
Remote Server returned '< #5.1.1 smtp;550 5.1.1 RESOLVER.ADR.RecipNotFound; not found>'


Original message headers:
Received: from SIXPR01CA009.apcprd01.prod.exchangelabs.com (10.242.58.19) by
 SIXPR01MB047.apcprd01.prod.exchangelabs.com (10.242.61.24) with Microsoft
 SMTP Server (TLS) id 15.0.810.5; Tue, 29 Oct 2013 12:00:30 +0000
Received: from DB3FFO11FD007.protection.gbl (2a01:111:f400:7e04::162) by
 SIXPR01CA009.outlook.office365.com (2a01:111:e400:2000::19) with Microsoft
 SMTP Server (TLS) id 15.0.810.5 via Frontend Transport; Tue, 29 Oct 2013
 12:00:29 +0000
Received: from emea01-am1-obe.outbound.protection.outlook.com (213.199.154.14)
 by DB3FFO11FD007.mail.protection.outlook.com (10.47.216.96) with Microsoft
 SMTP Server (TLS) id 15.0.805.12 via Frontend Transport; Tue, 29 Oct 2013
 12:00:27 +0000
Received: from SINPR06MB060.apcprd06.prod.outlook.com (10.242.51.155) by
 SINPR06MB057.apcprd06.prod.outlook.com (10.242.51.142) with Microsoft SMTP
 Server (TLS) id 15.0.810.5; Tue, 29 Oct 2013 12:00:23 +0000
Received: from SINPR06MB060.apcprd06.prod.outlook.com ([169.254.15.163]) by
 SINPR06MB060.apcprd06.prod.outlook.com ([169.254.15.163]) with mapi id
 15.00.0810.005; Tue, 29 Oct 2013 12:00:23 +0000
ITSystemSolAsked:
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Vasil Michev (MVP)Connect With a Mentor Commented:
Open the Portal, Exchange settings, Mail Flow, Accepted Domains, double-click the domain
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Vasil Michev (MVP)Commented:
Is your domain intent set to authoritative in Office 365? And where is your MX pointing at? Apart from the anonymous/default access, have you allowed external mails?
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ITSystemSolAuthor Commented:
Domain is set to authoritative in Office 365 and MX records are point at the Office 365 tenant all inbound emails are flowing through to Users with mailboxes on the Exchange 2007 system.  It is just this mail enabled public folder that is not receiving emails
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Vasil Michev (MVP)Commented:
Set it to internal relay, otherwise it will generate NDRs for any addresses it is not able to find in the cloud, without checking the on-prem server. The rest of the users are synchronized to the cloud as mail enabled, and it delivers to the targetaddress. So this will not affect them, but for the PF it might be what is causing the issue.
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ITSystemSolAuthor Commented:
how do you set it to internal relay.
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ITSystemSolAuthor Commented:
Absolutely awesome, was exactly the problem.  Thanks for the assistance.
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