A few questions.

Are the dial tone lines loop or ground start?

Is your Adtran 850 equipped with FXO channel units configured as POTS cards (Telcordia TR-08 standard), or as standard FXO using D type A&B bit signaling on the DSO bit stream?

There is a significant difference between each format.

Into what type of equipment does the T1 terminate into (D type channel bank or 1/0 DCS frame) at the far end?

If the far end is a LEC D4 type channel bank equipped with FXS channel units, you can not run the TR08 POTS signaling protocol.

Using a T1 test set capable of monitoring the T1 bit stream, and dropping out one of your FX channels with the capability to monitor A&B bit signaling, you should see the following:

Assuming Loop Start circuit operation with T1 SF.

FXO towards FXS:

Idle state (No ringing)
A/B = 0/1

Ringing state
A/B = 0/0

Talk State

A/B = 0/1

FXS towads FXO:

Idle State (On Hook)
A/B = 0/1

Talk State (Off Hook)
A/B = 1/1

If ESF, 16 state signaling is employed using A,B,C,&D signaling bits.

C bit will follow A bit. D bit will follow B bit.

If you have an NCI code associated with a LEC DS0 access circuit, it should be 02LS (Assuming a two wire interface at the far end). The FXO would hasve the equivalent to an NCI code of 02LO.