Hotmail not delivering to my Microsoft Small Business Server 2003

Hello Experts,

My organization is using Microsoft Small Business Server 2003.  The server has been up for over a year without any issues until today.  The problem I am running into is email from hotmail accounts are not getting delivered.  I think the problem is a hotmail issue, but I am not sure.  Here is what I did to troubleshoot the issue:
1.  Emailed my work account from my home SBS server.  The email is delivered to my work account without any issues.
2.  Emailed my work account from my Yahoo account.  The email is delivered to my work account without any issues.
3.  Emailed my work account from my gmail account.  The email is delivered to my work account without any issues
4.  Setup a new hotmail account and tried emailing my work account.  The email is not delivered and I get a delivery failure notification in my hotmail inbox.  The details of the delivery failue notification are as follows:

Reporting-MTA: dns;bay0-omc1-s32.bay0.hotmail.com
Received-From-MTA: dns;BAY140-W19
Arrival-Date: Fri, 23 Nov 2007 14:21:39 -0800

Final-Recipient: rfc822;nick@loucorp.com
Action: failed
Status: 5.5.0
Diagnostic-Code: smtp;554 Transaction Failed (650058837:169:-2147467259)

I did a google search on the diagnostic code, and the two results I found stated there may be an MX record issue.  I don't think thats the case because I can successfully email from my home SBS and my Yahoo account.  My understanding is if there was a problem with my MX record, then nothing would be delivered to my work Exchange server because the other mail servers would be sending it to the wrong IP.

Any ideas on what this could be?
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ndalmolin_13Asked:
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ATIGConnect With a Mentor Commented:
If you can recieve mail from everyone but hotmail I would say hotmail is having a problem....

asumming loucorp.com is you domain name here is what I get for you mx

loucorp.com     MX preference = 10, mail exchanger = lousbs1.loucorp.com
loucorp.com     MX preference = 20, mail exchanger = mx1.biz.mail.yahoo.com
loucorp.com     MX preference = 30, mail exchanger = mx5.biz.mail.yahoo.com
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Tom-J-LaelCommented:
Ndal,

what are the MX records pointing to yahoo for? It's possible that Hotmail is trying to deliver to those servers and not yours.

Also, can you yourself create an SMTP connection to hotmail?
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Tom-J-LaelCommented:
are you blocking spam using RBL's in connection filtering?

I set a test hotmail account, sent myself an email. the IP address it originated from
65.54.246.211

shows up on a couple of RBL's...though I'm sure they have quite a few outgoing SMTP servers depending on location...
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Imtiaz HashamTechnical Director / IT ConsultantCommented:
Tom, why would the emails go to the 2nd priority if the first is available? Unless the first one is busy everytime an email from hotmail is sent!

I think there are certain root DNS servers which do not have your MX records correct (very unlikely)!

I would still remove the yahoo MX records.
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Tom-J-LaelCommented:
Ihasham,

I agree, but weirder things have happened. If we elminiTe those other two MX records, we can work from there, and you agree.
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ATIGCommented:
Are you using yahoo as a 2ndary mx?

If you remove them you will not have any problem
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Imtiaz HashamTechnical Director / IT ConsultantCommented:
ndalmolin,

We haven't heard from you.

Kind regards,
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labelonukCommented:
Hi, We're having the same problem with Hotmail to our Exchange 2003 Enterprise box.  Our Turkish office is also unable to get Emails through to us as well - trying to get details of their configuration now.  

All other locations and web based accounts seem to be fine.

Thanks - Dave.
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ndalmolin_13Author Commented:
Hello All,

Thank you all for your input.  Before we purchased our Small Business Server, we had our email going through Yahoo.  We decided to keep our Yahoo service for two reasons.  One:  the owner of the business works primarily from home and is still using her Yahoo account.  Two:  if something were to happen to the Small Business Server, we could reimplement the Yahoo accounts fairly quickly.

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Tom-J-LaelCommented:
Have you checked the YHOO mailboxes to see if those missing HOTMAIL emails are in those mailboxes??  I would do that.
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ndalmolin_13Author Commented:
I finally got hold of a tech at MSN, and this was an MSN problem.  Everything is working now.
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