You have a public folder hybrid access configuration in which some mailbox users are located in Exchange Online and some mailbox users are located in the on-premises environment. In this situation, an on-premises user wants to use Microsoft Outlook to add permissions for Exchange Online users to access a legacy public folder. Or, an Exchange Online user wants to use Outlook to add permissions for on-premises users to access a legacy public folder.
However, when the user tries to add the cross-forest user, they receive the following error message:
One or more users cannot be added to the folder access list. Non-local users cannot be given rights on this server.
Additionally, a red stop symbol is displayed next to the user's name in the Add Users list.
You can't use Outlook to add permissions for objects that are located in different forests. Use Outlook to add permissions only when users reside in the same forest. For example:
On-premises mailbox users can use Outlook to add public folder permissions for other on-premises mailbox users.
Exchange Online mailbox users can use Outlook to add public folder permissions for other Exchange Online mailbox users.
On-premises Exchange admins can use the Add-PublicFolderClientPermission PowerShell cmdlet to assign public folder permissions to cross-forest users.