Here are the steps to change the primary domain type in Office 365 from Authoritative to Internal Relay. These steps are important to follow when migrating Public Folders in hybrid mode.
- Log in to the Office 365 admin portal as a Global Admin.
- Launch Exchange Admin Center.
- Under Mail Flow, select Accepted Domains.
- Use the radio buttons to change the domain type. Choose Internal Relay: Email is delivered to recipients in this Exchange organization or relayed to an email server at another physical or logical location.
Here is a screenshot from the admin portal:
Note: There will be a warning about connectors. It is safe to dismiss this if you're only making this change to mail-enable your Public Folders.
Mail will now be successfully delivered.