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Updated Dec 08, 2023
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Thank you for the quick reply and for the confirmation! I don't know when this problem was introduced, but we identified it now as we're seeing that more and more tenants still set to "Automatic - System controlled" are starting to behave like "Off" - as it is also announced.
We are still able to reproduce it right now, but unfortunately, we've already tried the Office 365 Support and the only solution provided was "It is by design, you have to set the external automatic forwarding to on".
Any chance you would know if this AS(7650) code is actually giving any relevant information? I couldn't find anything on the internet and that is the only different part in the NDR message received from an OOF compared to a normal automatic forwarded message.
Remote Server returned '550 5.7.520 Access denied, Your organization does not allow external forwarding. Please contact your administrator for further assistance. AS(7650)'