Issues with both on premise and cloud environment using the same domain

Hello Everyone,

we're running both on premise Exchange Server 2016, as well as Microsoft 365 with the same domain, but not in a hybrid setup. Only 5 users exist in both systems, the rest only have on prem mailboxes. The users on M365 also have their domain set to onmicrosoft.com.

One of these users, whos running the latest Windows 11 and Outlook365 builds on a Surface Pro 9 is having the issue, that Outlook wants a Microsoft login and stops retrieving mails from the on premise exchange server.

Creating a new Outlook profile through autodiscover correctly sets up the on premise mailbox and works for a seemingly random period of time (after 5 tries, ranging from about 30 m to 3 days). I've also setup the registry keys under HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\Outlook\AutoDiscover to exlude any m365 endpoints but to avail.

Any ideas are welcome

thanks