CM 3.1 8700

When we get an inbound call we can xfer the call via a VDN. Has worked for years.

When we call someone outside and attempt to xfer to same VDN it fails. When we hit xfer call is placed on hold and second appearance led lights up.

I turned trunk to trunk xfer on for a few minutes to see if that would affect it, it did not.

What am I doing wrong?