How to have non-delivery reports (NDRs) sent for unknown users

To receive NDRs when email is sent to an address that does not exist in Exchange:

In POPcon, disable "Re-route email to unknown recipients".
In Exchange, disable recipient filtering so that unknown recipients are rejected with an NDR rather than silently dropped.

Exchange 2007 / 2010

Exchange Management Console > Organization Configuration > Hub Transport > Anti-Spam > Recipient Filtering: uncheck "Block messages sent to recipients that do not exist".

Exchange 2003

Exchange System Manager > Global Settings > Message Delivery > Recipient Filtering: uncheck "Filter recipients who are not in the Directory".

Screenshots — step by step

Exchange 2010 Organization Configuration, Antispam - click for larger image

Message Delivery Properties Exchange 2003 - click for larger image

On the "Recipient Filtering" page please uncheck "Filter recipients who are not in the Directory".