SMTP Mail Server Configuration Problem - 500 points

I give in and will have to find a class on IIS and SMTP but for now I have a project that needs to be completed quickly and I'm stuck getting my SMTP Mail server working correctly.  Here are the details.

1. PC running MS Windows Server 2003 Web Edition with SP2
2. Running MS IIS but not sure what version comes with Server 2003 Web Edition
3. Three different websites (assigned to 3 different IP addresses) are defined and reside on the box.
4. Default SMTP Virtual Server defined, only 1 domain is defined under Domains which is DHXGYBB1 which happens to be the name of the PC.  All unassigned IP addresses are monitored.

Now for the problem.  This PC hosts 3 different websites.  Each website has an application that runs on it to allow users to register for an event.  When the user registers for the event, a confirmation email is sent to the user and another email is sent to the project manager for the event.  The application is written in ASP and uses CDO to send the emails.  This was working but now it has stopped and I don't know what I've changed.  Logging is turned on so I will submit the logs below.  Any help would be greatly appreciated as I am on a very tight deadline and have spent 4 hours already trying to figure this out.

BDR Log File  (actual email addresses have been modified in this posting to protect privacy)
==========
Unable to deliver this message because the follow error was encountered: "This message is a delivery status notification that cannot be delivered.".
The specific error code was 0xC00402C7.
The message sender was <>.
The message was intended for the following recipients.
      dyarosh@company1.net
      ICAACRegistration@company2.org

BDP File
=======
vCMM
  `   vGPT°              ÿÿÿÿvLPTl  À      \      <  vMPTÿÿÿÿè              ¬  :~:`ÉѪ^ ÀO£[C:\Inetpub\mailroot\Queue\NTFS_3e2d354101c7c49700000018.EML ðñ??vPFSÿÿÿÿ`   N   P    0  ¸        (  Ð              '  Ü        0  à          ä  !   $   #          "              |  '   (   !  ¤          ¨          °          ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Version: 6.0.3790.3959 ?DHXGYBB1 ???   <> ?ICAACRegistration@company2.org ???postmaster@DHXGYBB1 <HM3SOlbpH0000000a@DHXGYBB1> ???   @
     
  @     þÿÿÿ
 
  m     þÿÿÿvPFSÿÿÿÿP  ,  ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ                                            vRPTø  Æ        
  ÿÿÿÿp@ L  ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ!                                            vRPT¸  Æ            ÿÿÿÿdyarosh@company1.net company1.net ICAACRegistration@company2.org company2.org Delivery Status Notification (Failure) ?·        cN>ÄÇ
   &  vPFSÿÿÿÿ´           @  l   l      ????????????????????????????????????????????????????????????????????????????????????????????????550 <ICAACRegistration@company2.org>: Recipient address rejected: User unknown in virtual mailbox table
 521-EHLO/HELO from sender 72.xxx.4.34 does not map to dhxgybb1 in DNS
521-sending machine name must be provided as a fully
521-qualified domain via EHLO/HELO command.
521-see section 4.1.1.1 and 4.1.4 of RFC 2821
521 521: Please see http://www.company1.net/help/faq/index.jsp?faq=SecurityMail_Policy18784 for more information.
 vPFSÿÿÿÿ¬  L
 L
    ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

BAD File
=======
From: postmaster@DHXGYBB1
To: ICAACRegistration@company2.org
Date: Thu, 12 Jul 2007 11:13:46 -0400
MIME-Version: 1.0
Content-Type: multipart/report; report-type=delivery-status;
      boundary="9B095B5ADSN=_01C7C495FFDC1F3300000003DHXGYBB1"
X-DSNContext: 7ce717b1 - 1196 - 00000002 - 00000000
Message-ID: <HM3SOlbpH0000000a@DHXGYBB1>
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=_01C7C495FFDC1F3300000003DHXGYBB1
Content-Type: text/plain; charset=unicode-1-1-utf-7

This is an automatically generated Delivery Status Notification.

Delivery to the following recipients failed.

       dyarosh@company1.net

--9B095B5ADSN=_01C7C495FFDC1F3300000003DHXGYBB1
Content-Type: message/delivery-status

Reporting-MTA: dns;DHXGYBB1
Received-From-MTA: dns;DHXGYBB1
Arrival-Date: Thu, 12 Jul 2007 11:13:36 -0400

Final-Recipient: rfc822;dyarosh@company1.net
Action: failed
Status: 5.5.0
Diagnostic-Code: smtp;521-EHLO/HELO from sender 72.xxx.4.34 does not map to dhxgybb1 in DNS
521-sending machine name must be provided as a fully
521-qualified domain via EHLO/HELO command.
521-see section 4.1.1.1 and 4.1.4 of RFC 2821
521 521: Please see http://www.company1.net/help/faq/index.jsp?faq=SecurityMail_Policy18784 for more information.

--9B095B5ADSN=_01C7C495FFDC1F3300000003DHXGYBB1
Content-Type: message/rfc822

Received: from mail pickup service by DHXGYBB1 with Microsoft SMTPSVC;
       Thu, 12 Jul 2007 11:13:36 -0400
Thread-Topic: ICAAC 2007 Registration
thread-index: AcfElzfVEUoEkwiKT9eee11odXHCsw==
From: <ICAACRegistration@company2.org>
To: <dyarosh@company1.net>
Subject: ICAAC 2007 Registration
Date: Thu, 12 Jul 2007 11:13:35 -0400
Message-ID: <CE88D8C42B644DE6816543564D373798@DHXGYBB1>
MIME-Version: 1.0
Content-Type: text/plain
Content-Transfer-Encoding: 7bit
X-Mailer: Microsoft CDO for Windows 2000
Content-Class: urn:content-classes:message
Importance: normal
Priority: normal
X-MimeOLE: Produced By Microsoft MimeOLE V6.00.3790.4073
X-OriginalArrivalTime: 12 Jul 2007 15:13:36.0122 (UTC) FILETIME=[37F46DA0:01C7C497]

ICAAC 2007 Registration

Name: test 2 test
Title: test
Address: test
         
         
City: test
State: SC
Zip: 19191
Country: United States
Email: dyarosh@company1.net
Telephone: 555-555-1212
Fax:
Special Requests:
Confirmation Number: 1220077214


--9B095B5ADSN=_01C7C495FFDC1F3300000003DHXGYBB1--