One of my Exchange 2007 user encountered this error “The proxy address..is already being used by…. ” while trying to add a new SMTP email address to an existing mailbox account and it failed. He mentioned that the new SMTP address has never been assigned to any other mailbox in the organization.
Full Error:- The proxy address “smtp:info@contoso.com” is already being used by “contoso.com/Microsoft Exchange System Objects/my-Folder”. Please choose another proxy address.
The user mailbox is hosted on an Exchange 2007 mailbox database.
I suspect one of the public folder child item could be using this SMTP address, either it’s still in use or it’s orphaned.
To troubleshoot, I used ADSIEdit.msc tool to find the Exchange object causing the error, and under the attribute “class” it is marked “Public Folder”, on the properties dialog, I could see under “proxyAddresses” , the email address in the error was listed there.
Next is to use the tool PFDAVAdmin for exchange 2007,
Using PFDAVAdmin I was able to connect to the public folders in the organization and find one of the subfolders that was using the SMTP address shown in the error.
I requested user to choose another SMTP address, just as the error prompt suggested, and that solved it.
If the Exchange object is already orphaned and no longer in use in your organization you can delete it or rename the proxy-addresses attribute.
Joshua Udofia - IT Blog 