How do I change the primary domain type in Office 365 from Authoritative to Internal Relay?
Here are the steps to make this change. These steps are important to follow when migrating Public Folders in hybrid mode.
Here is a screenshot from the admin portal:
Note: There will be a warning about connectors. It is safe to dismiss this if you're only making this change to mail-enable your Public Folders.
Mail will now be successfully delivered.