SMTP Alerts in sharepoint

Hello folks...

I have an sbs 2003 server sp1, smtp service is functioning properly, and alerts for sharepoint configured properly, and somewhat functioning.  My problem is that the smtp service is using the internal .local domain to send the alerts to an outside email address.  So, naturally those emails are getting rejected with a 550 error citing the following...

550-unrouteable mail domain "internaldomainname.local"
550 Sender verify failed

My problem is that i'm not using this server for email services outside of this, (i will eventually be migrating email for the outside domain to be hosted here using exchange) and i simply want to send these alerts for a couple of sharepoint folders at this point.

So i've tried configuring another smtp service with the default domain being the company's outside domain name. (which, as mentioned, has mail hosted outside, with the webhosting company).   This smtp service is using it's own IP, and i've configured email settings in sharepoint to use this IP as the SMTP server.

But the NDRs still show up, citing the "administrator@internaldomainname.local" as the originator.

So, is there anyway for me to setup outgoing smtp for this without exchange, and migrating mail (pointing MX to the server IP)?

I'm kinda under the gun for time on this, and any help would be much appreciated.

thanks guys...



Full badmail record (from mailroot) below...

--------------------------

 From: postmaster@server.internaldomainname.local
To: administrator@mydomain.local
Date: Sun, 24 Sep 2006 23:25:31 -0600
MIME-Version: 1.0
Content-Type: multipart/report; report-type=delivery-status;
      boundary="9B095B5ADSN=_01C6E060410466F20000000Bserver.internaldomainname.l"
X-DSNContext: 7ce717b1 - 1196 - 00000002 - 00000000
Message-ID: <OlbpH71yE0000000b@server.internaldomainname.local>
Subject: Delivery Status Notification (Failure)

This is a MIME-formatted message.  
Portions of this message may be unreadable without a MIME-capable mail program.

--9B095B5ADSN=_01C6E060410466F20000000Bserver.internaldomainname.l
Content-Type: text/plain; charset=unicode-1-1-utf-7

This is an automatically generated Delivery Status Notification.

Delivery to the following recipients failed.

       me@outsidedomain.com




--9B095B5ADSN=_01C6E060410466F20000000Bserver.internaldomainname.l
Content-Type: message/delivery-status

Reporting-MTA: dns;server.internaldomainname.local
Received-From-MTA: dns;server
Arrival-Date: Sun, 24 Sep 2006 23:25:28 -0600

Final-Recipient: rfc822;me@outsidedomain.com
Action: failed
Status: 5.5.0
Diagnostic-Code: smtp;550-Verification failed for <administrator@internaldomainname.local>
550-unrouteable mail domain "internaldomainname.local"
550 Sender verify failed