Emails sent to accounts on hosting company from exchange accounts are being returned

Hi All:

I have a MS Small Business Server 2003 R2 Standard installation. We have 10 licenses and 20 users. For such reasons and the nature of the business we have setup local AD accounts for only 8 users. There are other 10+ users that are temp and only need email access.

The previous being said, it can be inferred that 8 users have an exchange account and the other 10+ have an email account through web hosting company.

The only problem with email sending is when from an internal exchange account (8 staffs) an email is sent to any of the external (10+ temps) email accounts. These emails are returned back with error stating they are account "" cannot be found.

I have tried several approaches (avoiding to have to pay for extra exchange licenses) including smart host, and Outlook client setup on each client to handle email sending through SMTP (which is tedious given it needs to be done on each client)

I would appreciate any assistance in clearing this issue.  Is there anyway EXCHANGE can be setup to forward/relay emails with accounts not in AD to the webhost  SMTP as when Outlook client is configured?

Thanks in advanced...
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Mal OsborneAlpha GeekCommented:
Is your local DNS domain set to domainname.local, or ?  
CCastellanosAuthor Commented:
It is set to domainname.local

Thanks for comment Malmensa.
If they all have the same address as the internal users, just with different usernames, then exchange will always bounce it back as it believes it is the email server for that domain when sent from the existing 8 AD accounts.  You will need to setup internal accounts, even if they are temporary, to allow access to the exchange server.  You can setup their PCs to POP the server for their email so they won't have to have direct access to the network.

If they are on different Domains, perhaps there is a recipient policy that is set to use the external domains name.
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CCastellanosAuthor Commented:
Thanks Kutyi:

Wouldn't I need a SBS License to allow them to POP the server and get their emails?

Probably, I am not an SBS expert but that sounds like Microsoft
Why not buy another domain name that is a variation of yours or an abreviation that you can assign to the temp users and host that externally.
You can also remove the recipient policy for your in exchange and have all email handled by your web host.  Excahnge will then just store email.  If you use this option you will also need to use outlook to snd the message through your external pop accounts in order to attach the appropriate return email address of as this will not exist if you remove the for your recipient policy.
CCastellanosAuthor Commented:
So, basically Kutyi, there is no way to have some of my users in exchange and the rest in the WebHost?

Thanks in advance for you follow-up.
Yes, however, you could remove the recipient policy and setup the POP connector in SBS to download the permanent users emails from the hosting company.  You probably would run into issue when outside users and mail recipients do a reply all as the email address they reply to may not be valid, ie user@domain.local.  There are also other issues with the POP connector that might pursuade you not to use it, just Google it and you will see for yourself.  I think the easiest way to manage this if you don't want to purchase licenses is to have permanent users pop there email through outlook,

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CCastellanosAuthor Commented:
Kutyi, your follow-up has been great and I appreciate it. Unfortunately, the truth of this matter was not as welcome though (I could not get a solution to my problem as I though could have been possible)... Yep The truth hurst sometimes.

Thanks much Kutyi
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