Using Exchange Functionality within a Local Domain

In thread Q_21054181.html you will find exactly what I am looking to accomplish, but I don't see a clear solution.  I am interested in setting up exchange under a local domain.  This local domain is not seem by the Internet.  We have an ISP today that maintains our POP3 email accounts.  My problem is, once I installed Exchange 2003 my outlook client can't not replay to received emails.  We can send new emails ok, but replys and forwards sit in the outbox and eventually receive the message 0x8004210B.  Note we can send emails that are new, just can't reply.  We truly just want to use calendar, shared folders, and contacts within exchange.  We really don't want the headaches associated with sending and receiving emails via Exchange.

Can you point us in the right direction to either bypass exchange for sending emails or fix the problem we are having?

I have followed the suggestions in Q_21054181.html and they are have not helped our situation.

Our environment consists of 5 workstations running XP and a Win 2003 Server SBS running Exchange 2003.  We are connected to the internet via DSL.

None of these problems exist if we remove the exchange server.