Design flaw with external sharing (guest users) and mail routing in Exchange Online
We have noticed a design issue in O365 with External sharing (guest users) and SMTP.
This has happened now many times with few different organizations.
Have discussed this with MS Technical Support and is currently Working As Designed - requesting change for this design.
Scenario goes like this:
1. our O365 users share files/data with External users, invite them with their email address firstname.lastname@foo.bar
2. invited users will log in to O365 to gain access, External User account is created and that object is used when routing email messages sent from our O365.
3a) if external users Exchange UPN is different from email address, the UPN is recorded when logging in and is also marked as primary SMTP address for this user.
If the user is not accepting emails with the UPN format (no alias defined), all emails sent to this user will then bounce back!
External User object will route the correctly typed email address to the UPN address listed in the External User object.
3b) if external user is not O365 user at all, user will log in with Microsoft (Live) credentials, and then the Live account info is marked as primary SMTP address for this user.
External User object will route the correctly typed email address to the Live account address listed in the External User object and not the correct address.
External Users SMTP address cannot be modified.
We can only delete the External User object to get emails working again, and that will ofcoz remove the External Sharing done in O365.
And problem will reappear when something is shared again with these users.
One possible solution is NOT to use External User objects for mail routing, always use MX records for external domains.
thanks,

2 comments
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sk commented
we are still having this issue, no real help through support - need to manually sort these out.
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Morten Foss commented
We have this exact problem in our organization. I vote for this change