We had an interesting issue the other day. After an upgrade to Exchange 2007 and Office 2007 users reported that they were unable to create an Out Of Office message. When attempting to do so, Outlook would claim that the Exchange server was unavailable. It was a real mystery since the Exchange server was available; they were sending and receiving email just fine. A further clue presented itself when we found that this issue only effected users on the Terminal Server. Users working from Desktop computers did not experience this problem.
During our investigation of the problem we noticed that on the terminal server Outlook was also unable to resolve the autodiscover record while on the desktops they were. We weren’t sure of the link between these two clues but pushed forward to resolve the autodiscover issue. We verified that all of the autodiscover records were correct.
We resorted to Internet research and found 1 conversation thread where someone noted that autodiscover was unable to resolve when you have a proxy server and the browser is not configured to exempt the internal domain from the proxy. This was indeed the problem. This business did run a proxy server. The browser in the terminal server did not have the exemption for the local domain, while the desktop browsers did because they were being autoconfigured by a local firewall client. Once this entry was made, Out Of Office and Autodiscover worked.
So, the solution to why users are unable to use Out Of Office in Outlook 2007 is that the Internal domain is not listed in Internet Explorer as exempt from proxy.