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DirSync not working after doing a cutover migration to Office 365 from SBS 2008

I have migrated a SBS 2008/Exchange 2007 on premises setup to Office 365. The migration was smooth with no issues. After migration, I changed DNS records to reflect Office 365. That is also working perfectly. Now my problem is with using DirSync to sync our local AD with Office 365. After enabling this, I get this error emailed to me for every user that was migrated:

Unable to update this object because the following attributes associated with this object have values that may already be associated with another object in your local directory services: [ProxyAddresses SMTP:UserName@domain.com;]. Correct or remove the duplicate values in your local directory. Please refer to http://support.microsoft.com/kb/2647098 for more information on identifying objects with duplicate attribute values.

I have found several things that *might* fix the issue, but I'm not sure where to go from here.

Here's what I tried:

1. Running IdFix as suggested in the link from the error.

IdFix tells me the users and groups have the error "topleveldomain" but does not give a suggested fix.

2. Performing these steps: Article Link

Step 2 resulted in errors during the 2nd script which did not create MEU, but still deleted the mailboxes (which I have since restored). Not sure if I did something wrong or this isn't what I need to do anyway.

Can someone help point me in the right direction to fix this issue. The main thing I am trying to accomplish is to have our AD sync with O365 for user maintenance and also for password sync. Any help would be greatly appreciated!!

Rick
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Vasil Michev (MVP)
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MrComputerIT

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Oh my! The email addresses in the AD are wrong!! I never caught that. The actual email addresses are "FirstNameLastInitial@Domain.com" but in AD in the "General" tab they are "FirstNameLastName@Domain.com" Has that been my problem all along??
It still isn't working. I still get the same errors.
I did a DirSync before and deleted the mailboxes. Turns out it still finds them. I purged them and now it works. I also still had to fix the UPN to get rid of our .local domain. Thanks for your help!