We have a client that we have the ARM templates working in Exchange online but they continue to get errors with their local Outlook clients trying to access them. In a hybrid environment what else is needed to get the local versions of Outlook to work? They are using Outlook 2016 and have E3 subscription.
Did you ever get a solution to this? We have the same problem with an Exchange hybrid environment. I have assigned the EM+S E5 license to the user, and everything works in OWA, but I get the following error in the Outlook 2016 client:
Your machine isn't set up for Information Rights Management (IRM). To set up IRM, sign in to Office, open an existing IRM protected message or document, or contact your help desk.