just to be sure use a domain diagnostic website, maybe you can find some problems for the relay. I like to use mxtoolbox.com
not the same error but different happened to me before and it was due to antispam appliance preventing the relay from some domains. maybe you can double check that as well
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by: peter41Posted on 2009-08-13 at 23:57:12ID: 25095709
Check if source IP of bounced messsage always the same like IP address in your MX record.
SMTP error code 550 means:
Requested action not taken: mailbox unavailable
(e.g. mailbox not found or no access)
"...the email has not even made it to their servers"
If I understand good, they say that email was not targeted to their server ?
There is target email address address pstrfstr@clchr.org and this mailbox must be registered in target email server directly or like alias, so sufficient is to look into mailbox list in server configuration and check if it is (or is not) there.
In my opinion problem should solve Rackspace, because they give you IP address of your MS records and they can check why their server bounces messages from hotmail.