This issue is specific to the Storage Emulator in the Windows Azure October 2012 SDK.
When performing a query that contains a standalone Boolean, the emulator will return an Internal Error. For example take the following query:
(false and (Phone eq '')) or (false and (MobilePhone eq '')) or (false and (Email eq ''))
will return the following error:
Server encountered an internal error. Please try again after some time.
Queries such as this can be the result of a complex query performed in LINQ using the Azure .NET Storage Library.
Queries like this run correctly in the production Azure Storage Service, and also in previous versions of the Storage Emulator.