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Hi Steve,
For 5.4.1 error, it will occur when Exchange Online Protection rejects the coming messages because the Directory Based Edge Blocking (DBEB) doesn't recognize the public folder as a valid recipient in Exchange Online. A workaround for this issue is to covert the SMTP domain from Anthoritative to Internal Relay. If you did not try it, please try it and let me know if it works.
If the issue persists, please provide the following information for us:
- Does the issue only happen to external users?
2. Does this issue happen to every public folder or specific public folder address?
3. Which kind for environment do you set up? Is it Hybrid deployment? 4. Could you please provide us with the detailed Non Delivery Report (NDR without editing) and tenant domain (@contoso.com) via the private message for further analysis?
I have sent you private message and here is the link to access it: https://answers.microsoft.com/en-us/privatemessage/inbox
Thanks,
Lance