A previous admin had created a mail box that forwarded to a distribution group. I did not like the implementation so removed the mailbox. I deleted the group in AD and then used power shell to delete the disconnected mailbox.
I then created a distribution group properly, and mail enabled it for external senders. I did however use the same email address for the distro that was used for the traditional mailbox that I deleted.
External senders can send to it fine. When internal senders try to send to it, they get a kick back.
I have cleared the old address references from the Outlook cache on my test machine with no luck.
The NDR is below
The e-mail address you entered couldn't be found. Please check the recipient's e-mail address and try to resend the message. If the problem continues, please contact your helpdesk.
Diagnostic information for administrators:
Generating server: ELM.domain.local
#550 5.1.1 RESOLVER.ADR.ExRecipNotFound; not found ##
Original message headers:
Received: from ELM.domain.local ([fe80::e09e:2497:475f:4e37]) by ELM.domain.local
([fe80::e09e:2497:475f:4e37%11]) with mapi id 14.03.0195.001; Fri, 21 Nov
2014 20:37:49 -0500
Content-Type: application/ms-tnef; name="winmail.dat"
From: Jonathan Anderson <firstname.lastname@example.org>
To: Help Desk <email@example.com>
Date: Fri, 21 Nov 2014 20:37:49 -0500