winhttp proxy settings not being picked up by system account

We are in the middle of setting up Exchange Hybrid with new 2016 Exchange servers in their own network segment which the HCW was run and they have access to the Microsoft 0365 endpoints only through our firewall and are our existing Exchange 2010 mailbox servers which are on a different network segment and have never been internet facing.

Mail flow, Legacy public folders and Free/busy lookups are working as correctly from EXO to these entities hosted on Exchange the 2010 servers.

To get free/busy lookups working from EXO to users on Exchange 2010 we implemented the following using an elevated command prompt on our Exchange 2010 servers, to point to a proxy that has been set up to route to the Microsoft 0365 endpoints

netsh winhttp set proxy proxy-server="172.22.90.102:80"

bypass-list="localhost;127.0.0.1;*.dom.com;exe10sever01;exe10server02;ex16server01;exc16server02”

The issue we are facing is that Exchange 2010 users cannot successfully lookup free/busy information for EXO users, despite the proxy being in place.

When testing using PsExec -s -i to launch Internet Explorer on the 2010 servers, with just Detect Settings selected in Internet Options/Connections/LAN settings

I do not see any traffic to our proxy being recorded in Wireshark

I'm unable to connect to specific microsoft urls such as https://nexus.microsoftonline-p.com/federationmetadata/2006-12/federationmetadata.xml, which just times out.

However if I launch IE again with PsExec and set the proxy details directly into IE I see the traffic being directed to the proxy server and the urls open.

Disabling Antivirus, firewalls etc on the Exchange servers make no difference to the outcome, is there some registry setting or something that I'm missing that is stopping the system account from using the proxy settings for Exchange?

According to your description, here are some troubleshooting steps for your reference:

Determine what error message you are receiving from OWA:

• Use the affected user's account to log on to the on-premises OWA.
• Create a new meeting request, and then add the on-premises user to the meeting.
• When the Hash marks are returned rest the pointer over them to display the error message. Note the error code number in the error message.

1. If the error messages is Error Code 5039: For more details: Exchange 2010/2013 user cannot see cloud user's free/busy (Error Code 5039)

Run below command to check if the web proxy setting is configured as the address and port number is replaced with your server address and port number:

Get-ExchangeServer | fl InternetWebProxy

2. If the error message is Error Code 5016, Determine whether the correct target address is specified on the MEU on-premises. For more details: Exchange 2010/2013 user cannot see cloud user's free/busy (Error Code 5016)

Run below command:

Get-RemoteMailbox Username |fl RemoteRoutingAddress

3. If the error message is Error code 5037, verify that the Org Relationship settings are configured correctly to enable Free/busy for the users. For more details: Exchange 2010/2013 user cannot see cloud user's free/busy (Error code 5037)

Run below command:

Get-OrganizationRelationship -Identity "Exchange Online to On Premises Organization Relationship" | FL
Get-OrganizationRelationship -Identity "On Premises to Exchange Online Organization Relationship"