Mail enabled public folder unable to receive inbound emai

We are currently running Exch 2000 server. I've created a public folder, have enabled mail and propagated all properties to public folder.  I am able to receive internal email to the public folder  but not receiving inbound email to the public folder.  When I try to send mail from an ie. yahoo acct to this public folder's smtp address, i was able to track the email through the SMTP gateway to the Exchange server the public folder is located on.  
Tracking event of the mail per the message tracking in Systems Mgr shows the following -
 msg submitted to advanced queuing
 started msg submission to advanced queuing
 message submitted to categorizer
 message delivered locally to
 non-delivered report (NDR) generated.
What am i missing in setting up this public folder? Why did the inbound mail go through to the server but not get routed to the actual public folder.
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Anonymous should have "Create items" access to the public folder.

The NDR probably says you don't have permissions to send mail to the recipient. If otherwise, please show us the sanitized NDR.
Check the permissions on the public folder.
Best practise is to set "Default" to NONE.
Ensure that anonymous has "Contributor" right. It doesn't need anything else - if you have changed it from contributor, change it back.
If you want internal users to email to this folder, then you will need to adjust the permissions as required for domain users, depending on whether you want them to see the folder or not.


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