Office 365 Internal DNS issues

I have recently started doing some migrations from a hosted exchange 2007 server onto office 365 and have ran into some issues. 
Since we have alot of users still using the hosted exchange (slowly moving users over 1 by 1 to 365) I have not fully turned off the local server and therefore had some issues with the autodiscover when setting up my email in outlook 2013.  
I instead used the domain and email given to me by microsoft (the <user>@<name>.onmicrosoft.com)   This at the least allowed me to be able to add my user and sync my email, but it presented me with another issue. Outlook and now lync ask
me for credentials every few mins.  I can cancel the password prompt and give it a few then it will start syncing again. 
After some research i found that it may be my internal DNS preventing seamless communication. I added the CNAME and SRV records to my local server and the issue still presents itself. 
Anyone run into this issue and have a resolution? I have tried killing my local credentials on the machine im using outlook on just in case, and verified with all the proper office tools that the autodiscover service is working.  I have synced up my
phone in seconds with no issues as well. 
Any input would be great! 
Thanks! 

Since we have alot of users still using the hosted exchange (slowly moving users over 1 by 1 to 365)
You really don't need to do this one by one, Office 365 will take care of most things. You might want to take a look at this article for a step by step guideline of how to migrate from Exchange 2007 to Office 365:
http://blogs.technet.com/b/canitpro/archive/2013/11/20/step-by-step-migrating-from-exchange-2007-to-office-365.aspx
Anyway, for the specific issue you met, I would suggest you to post in the forum of
Office 365 Community.
This forum focuses on questions and feedback for Microsoft Office client. There is not so much about Office 365 Admin\hosted\plan\Cloud aspects here.
The reason why we recommend posting appropriately is you will get the most qualified pool of respondents, and other partners who read the forums regularly can either share their knowledge or learn from your interaction with us. Thank you for your understanding.
Regards,
Ethan Hua
TechNet Community Support
It's recommended to download and install
Configuration Analyzer Tool (OffCAT), which is developed by Microsoft Support teams. Once the tool is installed, you can run it at any time to scan for hundreds of known issues in Office
programs.

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    - Delete and reinstall Office
    - Switch in IE between 32 and 64 bit mode but this is
    not possible with Internet Explorer 11
    - Tried the Microsoft Hotfix KB
    2726997 but got the message that it
    does not apply to our system.
    - Check registry references if owssupp.dll points to Office 15
    - Manually re-register owssupp.dll
    - Replaced owssupp.dll by the Office 2007 version
    - Checked if all SharePoint add-ons in Internet Explorer were enabled        
    -> 'Sharepoint OpenDocuments Class' refers to interceptor.dll
    not owssupp.dll
    - Check/Install “Microsoft Sharepoint Foundation Support”..
    Click-to-Run doesn’t
    have that option
    - Create registry keys in:  HKEY_CLASSES_ROOT\Installer\Components\55EAFA0B8A4403B428FDE038B252C621
    What there should be: HKCR\Installer\Components\55EAFA0B8A4403B428FDE038B252C621\x86\1033
    What should be added: HKCR\Installer\Components\55EAFA0B8A4403B428FDE038B252C621\x86\1043
    But the 55EAFA0B8A4403B428FDE038B252C621-key
    doesn't exist with the Click-to-Run version and manually creating it doesn’t help
    - Put the site in the 'Intranet Zone'
    - Put the site in the 'Trusted Sites' list (prodsharepoint.kindengezin.be)
             -> HKEY_CURRENT_USER\Software\Policies\Microsoft\Windows\CurrentVersion\Internet
    Settings\ZoneMapKey                    -> *.kindengezin.be
    (REG_SZ, Data: 1)
    - Check if our SharePoint 2010 On Premis environment is completely up-to-date
    - Create
    C:\Program Files (x86)\Microsoft Office\Office 15\ and placed the owsupp.dll in it; in case SharePoint would be looking for it in the wrong place;        -> Keep in mind that the folder structure with Office
    365 ProPlus Click-to-Run is different than the 'normal' Office 2013 as the owssupp.dll is now located in C:\Program Files\Microsoft Office 15\root\office15\owssupp.dll
    - Checked if our Firewall settings are up to date (IP-ranges and other settings)
    The test where I got it to
    work, but is not a solution in my personal opinion is: Open the Lync Basic 2013 setup and only check
    Support for Microsoft SharePoint Foundation
    In your Programs and Features list you now have 2 entries: Microsoft Lync Basic 2013 Microsoft Office
    365 ProPlus – nl-nl
    I do not trust this “solution” as I do not know the future consequences of this “solution” in terms
    of updates or functionality.

    Anyone? Have OWSSUPP.DLL issues with Office15 and IE11 as well - can't get the "Connect to Outlook" menu option on SharePoint calendars to show.

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