AADSync Tool, must ALL passwords be reset first before Password Sync will function?

We are trying out a new version of DirSync called Azure AD DirSync. The accounts have synched to Azure AD, however, the only way password sync works is if it is first reset On Prem, then in about 3 mins, event 656 and 657 appears, afterward we can log into the portal. My question: Is this the proper behavior? Must the On Prem password be reset FIRST before our users can log into the Portal? Or is this a known issue? (If so, is it documented somewhere?)

Thank you!
Anthony K O365Asked:
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Anthony K O365Author Commented:
Thank you! I'll give it a try. BTW, Microsoft says that in the next version of the tool, password sync should work 'Out of the Box' as this is a known issue to the product developing Team
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