Thanks Aquacer, but unfortunately my question was moderated and edited so much that what’s displayed is not what I asked. (It was my first question, and although long it disn’t waste words) Anyway. I think the main points were in these two chunky exracts:

“Looking through the message tracker and headers and intercepting the email at various points it appears that the following happens:
An email is sent (from anyone) to fred@other_lot.org. This domain is hosted by a commercial ISP, and performs email forwarding to fred@xyz.org. The email is then forwarded and arrives at the pop server which is used by xyz.org’s ISP. Looking at the forwarded email header while it is still on this server (by using web mail) reveals that the “To” address is still set to fred@other_lot.org while the “Envelope-to:” address is set to fred@xyz.org. ” ( … header extract here…)

“My assumption is that because the “Envelope-to:” address is valid, then that is the reason why the email does not bounce even though the “To:” address is still set to fred@other_lot.org. However, I also assume that because the “To:” address is not a valid address (wrong domain) then that is the reason why the email ends up in the failed mail folder as undeliverable pop3 mail.
In the logs it appears that Exchange does not openly mention the “Envelope-to:” or “To:” addresses and simply refers to “Recipient”. But I may have missed something.
Toggling the filter recipient option between on and off makes no difference.
I can work around it by using a server side rule, but does anyone have an insight into what’s really going on?”

I’ll give you a vote for your answer, as you answered correctly the question as it appeared.

Regards

Steve

Sorry about this. Please ignore my other post

I thought I’d replied to the answer to my question and it ended up on Xavier’s question.

Apologies again, please ignore.

Steve