Microsoft has acknowledged a new issue affecting Outlook for Microsoft 365 users and causing email-sending problems for those with too many nested folders. This issue is likely related to an older problem concerning mailboxes with more than 500 shared folders, a limit that was lifted in 2019. However, Microsoft failed to consider cases where users would also have that many folders in their primary mailbox.

Users experiencing this issue may receive an unexpected Non-Delivery Report (NDR) with the error code 0x80040305 when attempting to send an email using Outlook Desktop. Microsoft has provided an advisory stating that this issue is similar to the prior 500 folder limit that the Outlook Team fixed, but it only targeted shared folders and did not include the scenario occurring in the user’s primary mailbox.

Affected users are advised that their emails may not have reached “some or all” recipients and are encouraged to either resend the message later or contact their network admin for assistance.

While Microsoft is currently investigating this newly acknowledged issue, they have also provided some workarounds for affected customers. These include reducing the number of folders with subfolders to under 500, with a maximum of 450 nested folders during the ongoing investigation. Another temporary fix is to keep all mailbox folders collapsed instead of expanded. Additionally, users are advised to avoid certain online actions in Outlook, such as using the buttons for “View on Server” and “Click here to view more on Microsoft Exchange,” or using “Include older results” when searching. If any of these actions are performed, it is recommended to restart Outlook immediately for optimal performance.

Microsoft has been actively addressing various issues related to Outlook throughout the year, including bugs causing crashes, sign-in errors, delays in saving attachments, and access problems with emails and calendars. Users can expect Microsoft to continue working on resolving these issues to provide a better Outlook experience for all Microsoft 365 customers.

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