Exchange: A configuration error in the e-mail system caused the message to bounce between two servers or to be forwarded between two recipients.

We were having an issue with John Smith exchange setup. John was unable to receive email and received the following error:

The following recipient(s) cannot be reached:
Smith, John on 01/15/2010 10:05
A configuration error in the e-mail system caused the message to bounce between two servers or to be forwarded between two recipients.
Contact your administrator.
<mailserver01.someserver.internal #5.4.6>

I looked into the Exchange settings on mailserver01. He was not in the mailbox list on the Exchange server. I pulled up AD Users and Computers and did a “Find”. John was listed as a Domain user, but not an Exchange User. I discovered that for whatever reason he was created an external user. I deleted his external Exchange mail account and recreated it to have a mailbox on the system. Once created, I had to manually add the mailbox types MS, SMTP, and X400.