Active Sync 4.5 and Exchange sync issue

Ok, a little background. Using PPC-6700, sprint, was set up to sync with Exchange (SBS 2003) from desktop and internet. Desktop sync stopped working but internet sync with Exchange still worked. Performed a hard reset and got desktop sync back but will not sync with exchange, error code 80072EFD.

I have installed the certificate on the windows mobile device, confirmed all the device and active sync settings. No Anti-Virus or firewall on desktop. It appears to connect to the server. I can see the network connections opened by Wcesmgr.exe between the PPC and desktop pc and also between the desktop pc and the SBS2k3 server. It connects, says it's syncing folders, and then moves on without syncing and produces the above error. It does the same thing when syncing via internet.

Nothing has changes on the server. During troubleshooting I reissued the certificate but that did not resolve the issue.

Any Ideas?