Exchange Email keeps asking for a Passcode

I have my phone connected to my exchange server via active-sync. However, this requires that you set a pass-code on the phone for security...which is a good thing. The problem is that the exchange email account does not synchronize this pass-code and requires you to enter a "NEW Pass-code" before it will get new data. This means that my messages are not being pushed to the phone because it thinks it does not have a pass-code. Has any see the same and do you have a fix?
Thanks,
CMR

Place the iPod in Recovery Mode and restore via iTunes.
iOS: Wrong passcode results in red disabled screen

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