Ok I got the answer for you guys if you get a 500 Error running ActiveSync Tester.
The reason you cannot connect your iphone is probably because NTLM Authentication is turned off on the mail servers IIS which hosts your OWA and OMA. This was our problem.
So as suggested in this forum i ran the ActiveSync Tester and failed with a 500 error which took me to this page for troubleshooting step by step guide.
http://support.accessmylan.com/kb/article-56.html
i followed these instructions to the T and it worked. Didn't even need to restart the server. Note: creating the ExchangeVDir registry key has NO Space in between Exchange and VDir when creating the registry Key although the instructions say to use a space in it. It should look like this -> ExchangeVDir exactly with Case Sensitivity
These instructions basically set the server's OMA to use different login and authentication methods then OWA, this way, you can use .net or other login methods for OWA and have OMA use NTLM and Basic Authentication which apparently the iphone exchange active sync requires.
Hope this helps,
thanks all for leading me to ActiveSync Tester, i would have never have found the answer if it weren't for that
Tytuss