Cannot sent to user with "Delivery has failed to these recipients or groups". How to fix it?

If you encounter the following issue:

From: Microsoft Outlook
Subject: Undeliverable:

Delivery has failed to these recipients or groups:

The email address you entered couldn't be found. Please check the recipient's email address and try to resend the message. If the problem continues, please contact your helpdesk.

You may need to remove the Suggested Email Contact by:

1. Mouse over the Suggested Email Contact
2. Delete the Suggested Email Contact using cross button next to the Suggested Email Contact 

If you still receive same bounce back message, please type user's full address and then click the Check Names button in the Outlook menu before sending the message.