Core Issue
In the Cisco CallManager Express environment, if a call is made from one IP phone to another that is busy, then no busy tone or engage tone is heard. This is a normal behavior when ephone-dns are configured as dual-line. This means that each line instance has two channels available. This is needed for things like full consult transfer and conference. The normal behavior with dual-line configured is that if a call is already active on the first channel, and another call is made to that extension, it rings on the second channel.
Resolution
If you want a busy tone to be returned when an extension is busy on the first call, you can configure huntstop channel. This output provides an example:
ephone-dn 1 dual-line
number 20873
pickup-group 200
name Dave Pandit
!--- Add this line:
huntstop channel
call-forward busy 20860
call-forward noan 20860 timeout 20
hold-alert 30 originator
For more information, refer to Cisco Unified CallManager Express 4.0.(1) New Features and Cisco Unified CallManager Express Command Reference.