Outlook - unable to create forwarding rule

Subject-keyword forwarding is supported, so do not abandon the feature; isolate whether Outlook is rejecting the subject condition or the forwarding action, then involve the Microsoft 365 administrator if forwarding is the failing component.

Isolate the failing component

Since saving the complete rule has already failed repeatedly, do not recreate that same combination again. In Outlook on the web → Settings → Mail → Rules, perform these tests:

1. Create a temporary rule:
   • Condition: subject includes one simple, distinctive word.
   • Action: move the message to an existing mailbox folder.
   • Select Save.
2. If that saves, edit the temporary rule:
   • Keep the same subject condition.
   • Replace Move to with Forward to.
   • Specify one recipient only, then save.
3. Interpret the result:
   • Subject + Move also fails: the problem is with the mailbox’s rule state or service, not forwarding specifically. Delete only the unsaved/broken test rule and have the Microsoft 365 administrator open a support case with the exact time of the failed save.
   • Subject + Move saves, but Subject + Forward fails: the forwarding action or destination is the discriminating factor. Continue below.
   • Both save: send a message containing the keyword and verify delivery. Server-side web rules run without classic Outlook being open.

Microsoft documents Settings → Mail → Rules → Add rule, with additional conditions and the Forward to, Forward as attachment, or Redirect to actions. Forwarding sends the message as coming from you; redirecting preserves the original sender.^1^

If the destination is outside your organization

Ask the Microsoft 365 administrator to check the outbound spam policy’s Automatic forwarding rules setting. An organization can disable external automatic forwarding; this does not affect forwarding between internal users.^2^

The administrator should check:

Microsoft Defender portal → Email & collaboration → Policies & rules → Threat policies → Anti-spam → Outbound spam filter policy → Protection settings → Forwarding rules

The relevant setting is:

• On – Forwarding is enabled
• Off – Forwarding is disabled
• Automatic – System-controlled, whose behavior can differ between organizations^3^

A policy block normally becomes evident when the rule executes: Exchange generates an NDR containing 5.7.520 Access denied, Your organization does not allow external forwarding. Therefore, a generic error while merely saving the rule does not by itself prove that this policy is the cause.

Administrator checks if the rule saves but does not forward

An Exchange Online administrator can check for conflicting mailbox forwarding and blocked remote domains:^4^

Get-Mailbox [Email] |
  Format-List ForwardingAddress,ForwardingSmtpAddress,DeliverToMailboxAndForward

Get-RemoteDomain |
  Where-Object {$_.AutoForwardEnabled -eq $false}

Also check these documented restrictions:

• A rule cannot forward or redirect back to the original sender.
• A forwarded message cannot be repeatedly forwarded by Inbox rules; Exchange applies loop prevention.
• A forwarding/redirect rule supports no more than 10 individual recipients.
• Existing mailbox-level forwarding can prevent Inbox-rule redirection from working.^4^

Your Windows 11 build is unlikely to be the deciding factor because the save operation occurs against the Exchange mailbox through Outlook on the web.

References

1. Use rules to automatically forward messages | Microsoft Support
2. Control automatic external email forwarding from cloud mailboxes
3. Configure outbound spam policies for cloud mailboxes
4. Diagnose Outlook Inbox rules that aren't working - Exchange