If you have upgraded your Exchange server from Exchange 5.5 to 2000 or 2003, you may get a spurious error that reads: "Exchange is currently in recovery mode. You can either connect to your Exchange server using the network, work offline or cancel this login."
The accompanying dialog box has buttons for Connect, Work Offline and Cancel. If you attempt to reconnect, everything works -- until the next time you start Exchange, at which point the spurious error reappears. (The Exchange Server itself is, needless to say, not actually in recovery mode, which is all the more confusing.)
There are two main reasons why this can happen. The first is if an old e-mail profile is used against an information store that was recovered or imported from another store, causing a conflict between local and remotely-cached data. The solution in such a case is to delete and recreate the Exchange Server profile for the Outlook client in question.
However, another common reason this happens after upgrades to Exchange 2003 is a Domain Name System (DNS) failure. If the client machine is unable to resolve the Exchange Server because of mis-configured internal DNS, then this (rather misleading) error will also come up. This may actually be the more common of the two problems, since it's easier to misconfigure DNS than it is to cause the problem described in the first scenario.
One sure symptom of this problem being a DNS resolution problem is if all workstations have this problem. Bear in mind that it's also not impossible for this to be caused by a combination of both problems.
Serdar Yegulalp is the editor of the Windows 2000 Power Users Newsletter.
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Related information from SearchExchange.com:
Tip: 'Exchange is in recovery mode' domain issue
Expert Advice: Exchange in recovery mode
Troubleshooting Guide: 'Exchange is in recovery mode' errors
Learning Guide: Exchange Server backup and recovery
11 tips in 11 minutes: Migrating from Exchange 5.5 to Exchange 2003
Reference Center: Exchange Server backup and recovery resources