Unable to fax (send or receive) regardless of using *99 with or without area code, or with or without area code and '1' as prefix. There is no handshake from the destination machine.
Current Home network setup:
Powerline Adapter - to enable PC, iMac and HP Officejet Pro to connect wirelessly to Internet. Powerline adapter is plugged directly into AC wall outlet.
Apple Extreme Router: Has 4 portals plus power connection. Power plug is connected to surge protector.
Portal #1: Ethernet cable (RJ45) connection to Time Warner computer modem.
Portal #2: Ethernet cable connection (RJ45) to second computer (PC) in home network.
Portal #3: Apple Extreme Router connected to Powerline Adapter by Ethernet cable.
Portal #4: Apple Extreme router connected to Ooma Telo by Ethernet cable.
AT&T telephone system with answer machine:
Line 1: connected to Telo in "To phone" portal.
Ooma Telo is connected to the router by cable enclosed in the Ooma package. It is connected to portal #4.
Ooma Telo is connected to AT&T telephone system as noted above in AT&T Line 1.
Using a phone splitter in the Phone portal on the Telo and connecting the AT&T into one side of the splitter and the fax into the other does not work. In fact, doing so deprives me of use of the phone. The fax machine gives an indication the phone line is in use and picking up the handset gives a busy signal.
HP OfficeJet Pro 8500A:
Portal labeled 'Line' is connected to telephone jack.
Portal labeled 'Ext 2' is open (not used)
I also have a UPS in the mix but, since it provides backup power in the event of power failure I have not included it.
Try removing the powerline adapter from the mix. I found mine wasn't allowing enough upload bandwidth consistency. I have an Apple Time Capsule and since Apple routers don't have QoS (Quality of Service), I had to add a good router like my Cisco as a gateway for the QoS capability and it's made all the difference in providing consistently good voice quality. More about that is here and here.
Don't use the flat cable that came with the Telo, throw it away. It's not a good choice as it can cause issues due to cross-talk.
Page 75-77 of your HP OfficeJet Pro 8500A manual describes faxing with VoIP. If you have not done so already, try lowering your fax speed (page 75) and disable the ECM function (page 62). For the Telo, use *98 as your dialing prefix.
Service: Premier 1/30/2012
BELL Canada Port: 1/30/12 - 2/13/12
TekSavvy via BELL FTTN: 25 Mbps/10 Mbps
Setup: Sagemcom 2864 > Cisco E2000 > Time Capsule v1 > Telo
Handsets: Panasonic KX-TG6655S DECT 6.0