Some of the users have been migrated, their mailboxes have been synchronized and after switching their mailboxes mail flow stopped working for the entire organization.
When examining the outgoing queue on source Exchange server it is visible that there are thousands of messages and number is increasing, when examining the log it informs about failures, not authorized. Issue is partially caused because target Exchange 2007 server by default drops the connection as soon as there are more than 5 protocol errors. Increasing this setting is not desirable and doesn't really help.
When examining the messages it has been noticed that the sender field is blank and has no value.
In source domain some users were configured to send mail to alternate recipients (in this case a contact with external e-mail address) and the setting
Exchange General | Delivery Options | Forward was set to "Deliver Messages to Both Forwarding Address and Mailbox", but under "Forward to" there was nothing specified, field was blank and greyed out (see the screenshot below).
This results in Exchange server acting in a loop and trying to send the e-mail again and again, but failing because there is no name specified in field "Forward to".
This is a simple non-technical explanation of the issue.
Run a report in source domain and locate all users which have:
"deliverAndRedirect" set to TRUE
Use the GUI to unselect "Deliver Messages to Both Forwarding Address and Mailbox" (first you need to click on "Forward to" and type a name to activate the checkbox "Deliver Messages to Both Forwarding Address and Mailbox".
Alternatively use ADSI Edit and set "deliverAndRedirect" to FALSE (see screenshot).
It is advisable to find all users who have "deliverAndRedirect" set to TRUE and treat them accordingly, clean up this setting before switching them, set the setting on target side manually and skip from synchronization the attributes "deliverAndRedirect" and "AltRecipient".
For more information see a related KB article SOL26347 addressing a similar issue in target domain: