Using New Outlook on Windows for professional communication and productivity
I would not assume this is a mail-flow/server issue yet. The fact that the number of duplicated logo attachments appears to correlate with the number of messages generated by the Mail Merge is a particularly interesting clue.
Microsoft currently lists Mail Merge in New Outlook as only "Partially Available", while it is fully available in Classic Outlook. That makes the New Outlook Mail Merge implementation itself worth isolating before investigating Exchange Online transport.
An image in an HTML signature is normally included as inline MIME content and referenced from the HTML body. If the Mail Merge process is incorrectly reusing or accumulating those MIME parts while generating individual messages, it could potentially explain why recipients receive one message containing many copies of the same logo.png.
I would run a controlled test with perhaps 5 recipients:
New Outlook + Mail Merge + signature logo
New Outlook + Mail Merge without the logo
Classic Outlook + the same Mail Merge + the same signature/logo
Then compare the received messages.
I would also check Message Trace in Exchange Online. If Exchange shows that separate messages were submitted normally to each recipient, but one of the received messages contains multiple copies of the same inline image, I would inspect the message headers/MIME structure rather than assuming Exchange transport duplicated the attachments.
If the problem reproduces only with New Outlook and disappears using Classic Outlook with the same recipients, template and signature, that would strongly suggest a New Outlook/Mail Merge issue.
Since the client is sending to 200+ recipients, I would definitely reproduce this first with a small test group before performing another production mailing.
If possible, please let us know whether the same behavior occurs using Classic Outlook. That comparison would be very useful for narrowing this down.
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