We have been using 'distribution groups' to send SSRS reports because they are easier to manage, but the reports are not being delivered when 'Senders inside and outside of my organization' is not checked on the distribution group under 'delivery management' on our on-prem Exchange. Yes, we have a hybrid setup.
We get the error message below when 'Only senders inside my organization' is checked:
Remote Server returned '550 5.7.133 RESOLVER.RST.SenderNotAuthenticatedForGroup; authentication required; Delivery restriction check failed because the sender was not authenticated when sending to this group
'
The mailbox sending the reports is a shared O365 mailbox. The distribution groups are visible in 'Exchange Admin Center' under Mailboxes > 'Distribution lists', but have a message stating that the group can only be managed on-prem Echange.
I have a feeling the sending O365 mailbox is being considered as an external mailbox. However when we were using a static list in SSRS we did not have this issue; same sending mailbox, more or less same recipients.
Any idea how to fix this situation?
EDIT: SSRS mail settings