Mail suddenly not getting delivered internally or externally - Running SBS 2003 Prem SP1 Exch SP2

Apologies in advance for the length of content but want to give a full picture.  We've happily been running SBS 2003 Prem edition now for over 12 months with 35 users and all working very well.  2 Days ago the network appeared to "lock" and no one could access outlook/or files located on the server.  I simply went onto the server and restarted it.  All network access was regained. (This is not something that normally happens)  This is where the fun began with outlook/exchange.  Although outlook would connect to exchange and public calendars, tasks etc could be viewed modified by all, e-mail functionality appeared to stop dead.  Although a user could access there inbox etc and view old mails new messages created would not get delivered either internally or externally.  They would go into the users sent items.  In exchange Queues these were shown as "Messages awaiting directory lookup" By this time there were approx 30 mails built up.  I decided to simply restart the server again in the hope that this would resolve things.  When the server restarted nothing was left in the queues area but no mail had been delievered.  I tried sending further internal and external mail but still this was not been delivered and was not showing in the queues area in exchange either.   I had a look in the event viewer and the only thing that looked out of place was that is said that the mailbox "E-Mail Parser" had reached its storage limits and would not receive or deliver and further mail.  We have a bespoke aspx based crm system that is currently be developed by a 3rd part company and they said this is something they had setup a few months ago but were not actually using.  I decided using the server management facility in sbs to delete the user E-Mail Parser which also deleted the exchange mailbox.  I then turned of auto archiving of mail which was previously turned on.  Again I rebooted the server but still nothing changed with regards to mail.

I looked into the badmail folder on the server and it was empty.  I then learnt that exchange sp2 clears the bad mail folder anyway.  I found an article which I followed which allowed this to be turned back on and set this up.  At the same point via add remove programs and under windows components and re installed the smtp service.  Rebooted the server once again.  Now when sending internal e-mail using outlook the mail is going directly into the bad mail folder.

If I open up the failed item in notepad it says: -

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.

I’ve re checked the event logs but still no errors?

Can anyone help at all?  As you can imagine having no e-mail is a major disaster for the company and I’m not sure what to try next?

Any help would be greatly appreciated.

Regards


Steve Hallsworth