Our organization has recently (beginning in March 2014) started reviving the following NDR error when sending email to various clients who appear to be using Office365 or some other Microsoft hosted mail service:
somebody@microsofthosteddomain.com - Permanent Failure: MX Lookup failed: error looking up IP for host microsofthosteddomain-com.mail.protection.outlook.com
The MX failure is occurring because the MX record returns the domain name with a "-" before the .com which does not exist in the actual domain name.
The error is sporadic in that on some occasion we can do a "forced resend" and it will push through, on other accounts, the error is persistent and we can not send to the account without the NDR being generated.
I can add that these accounts were find until they switched to the Microsoft hosted product for their email.
I have seen posts from a few years back that indicated this was a problem with DNS propagation and would generally resolved once the correct DNS information had propagated to all DNS servers.
Not necessarily looking for a fix as I do not believe the error is on our side, just some information as to how this issue is being handled (I am making the assumption that I am not the only one having this problem and that it is a result of organizations upgrading from Microsoft 2003 servers/Exchange to the Office 365 product).