Froyo 2.2 (FRG22D) - Exchange

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Since upgrading to Froyo I get the new standard security message when creating an Exchange Account to a hosted (external) exchange email provider. Well I have re-added the account twice and I keep getting an error with security with my connection.

Is this an issue with my phone or exchange provider?

 

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FYI - this appears to be an issue with the Droid X also. Exchange works fine on the HTC Droid Incredible.