Thank you for the help. However the advise to add a CNAME record to both the internal and external DNS does not work. The external DNS (Office 365) is setup as per Office 365 instructions. The internal DNS does NOT allow for adding a CNAME record for autodiscovery.outlook.com since the FQDN appends my local domain to it, namely autodiscovery.outlook.com.mydomain.local.
As far as the other advise goes we do have the latest Office 365 software and all Windows updates and Office updates have been installed.