Help me understand SMTP server bounces and lockdown

I'm using Win 03 Server Pro and the bundled Virtual SMTP server. I'm storing email addresses in SQL Server and sending auto verification message using a 3rd party DLL (xp_smtp_sendmail) - not exchange server or MAPI client. I need to understand what happens when a user stores an invalid email address - well formed but invalid -

It would end up in the Badmail directory?
It will re-try until Expiration timeout setting?


On the lock down side of things...

This server functions as a web server (sits in Web Service Provider farm) and needs to provide outbound mail for the local SQL Server, ASP pages and the occastional direct email from the System Admin. Given that profile, what setting should i implement to for adaquate security?

juststeveAsked:
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marc_nivensCommented:
If the application were to try to send an email to an invalid address via Win2k3 SMTP, the message would be NDR'd.  Badmail is for NDR's that cannot be returned to sender due to an invalid from address.  So if your application were using a bogus from address, then these messages would in fact end up in badmail.

As far as security (at the SMTP level at least) you should lock down the relay settings for the virtual server.  Make sure the list for allow relay says "only the list below", and that the local server is the only one listed.
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juststeveAuthor Commented:
Thnkx. What's the DROP folder for?
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marc_nivensCommented:
You can take any propery formatted message and put it in the drop folder to be queued for delivery.  SMTP enabled apps that run on the server often do this.
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