"Security policy error" while setting up "Microsoft Exchange Hosted Services" Exchange Account (corporate user)

Question

I'm a corporate user with a very large company that is using Microsoft Hosted Exchange services actually hosted by Microsoft employees at their facilities.  I called Palm support and they were clueless and zero help.  The lady pointed me to some Palm KB article that I had already read and only remotely had anything to do with my problem.  I see nothing on this error message in the forums and google searches. Sprint has even replaced my palm pre due to other reasons and the same error occurs after I configure the exchange account. I'm also seeing the error when I configure my account on my wifes brand new pixi. Both our pre and pixi already have exchange accounts successfully configured on our phones that are hosted by sherweb. The sherweb exchange accounts work without issue. I have tried configuring this microsoft hosted exchange account 5-6 times with the same result. It accepts my configuration information and adds it to the list of available email accounts in the pre. However, it keeps popping up this message stating "Security policy error: "Exchange... Tap for details" (with a yellow exclamation mark). Then it says "Security Policy Error" The account Exchange (first part of my email address) is disabled because security policies cannot be set." "Leave it disabled" or "Remove Account". I know something is working because it enforced a Password or Pin policy on to my phone which is not required unless this account has been added. I can also see it in the "Mobile Devices" section of web outlook when I login. This is the place in web outlook where you can see the last time the device synced, where you can remote wipe the phone etc. If anyone has any idea how to resolve my issue please post. Any ideas? I'm fresh out of ideas on this problem and very frustrated with Palm Developers. Just another example of poor development and testing practices by Palm. I hope they correct this issue on subsequent releases but I am only marginally optimistic that they will ever get this exchange mail support to the level necessary to support large corporations. What I do know is that my Microsoft Hosted Exchange account works fine on a Windows Mobile phone and a iPhone 3GS (confirmed by other coworks who have configured their phones using our exchange services). As a result, I have no choice but to blame Palm for this problem instead of Microsoft. Palm please fully support microsoft exchange mail users!!!!
Post relates to: Pre p100eww (Sprint)
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Answer 1

From my understanding of EAS and PDA devices, if the server as a policy to enforce and the device cannot provide that policy then the server will not allow the device to connect. The KB I gave you has a listing of what policies the devices supports, if your server supports more than that then it could deny the connection. As for what the iPhone does and does not do we cannot answer that due to we are not iPhone.
I did find an article that may explain a little better for PDA and exchange: http://www.infoworld.com/d/mobilize/how-avoid-smartphone-exchange-policy-lie-004