SMTP Error 550 5.1.1 - recipient rejected

Experts,
I have been investigation an email problem on our server. We have Microsoft Server 2003 running iis6, which is running the SMTP virtual server. The SMTP sends our emails and til now we have just been using it with its default settings. The web application that we uses ASP and the cdo.message object to send emails. It has all worked fine til just recently.
One of our clients sent out an emailing promotion that sends out multiple emails, in a loop in code, so theres just one To address.
The code still works and has been used for years, so I´m sure its a config issue.
Out of the 600 emails sent 120 came back as undelivered.
Some of the things that I have looked at as a solution are checking the IP of our server for mail server blacklisting at www.mxtoolbox.com/blacklists.aspx. That came back clean.
Also I have looked at the FQDN, this is just set to the name of the computer and the only domain in IIS is the default one which is named the same. I found this article on the resolving the FQDN. http://msforums.ph/blogs/jpaloma/archive/2006/08/14/Hot-Tip-_2D00_-Need-Fully-Qualified-Domain-Name-_2800_FQDN_2900_-in-HELO-Command-Error.aspx 
This would require a restart after I add the Internet domain name in Primary DNS suffix of computer. I cant do this as it would have to be schedule and risk assessed.
Some of the error messages I am getting in the NDRs are:
550 sorry, no mailbox here by that name. (#5.7.17) (in reply to RCPT TO command)
AND
Final-Recipient: rfc822;paco@unifam.es
Action: failed
Status: 5.5.0
Diagnostic-Code: smtp;550 <paco@unifam.es>: Recipient address
rejected: User unknown in virtual mailbox table

i have attached some snippets of the logs
Thanks

OutboundConnectionResponse, 15/09/2008, 14:00:30, SMTPSVC1, EUW0600198, -, 46, 0, 33, 0, 0, -, -, 220 smtp.abserver.es ESMTP Server,
 OutboundConnectionCommand, 15/09/2008, 14:00:30, SMTPSVC1, EUW0600198, -, 46, 0, 4, 0, 0, EHLO, -, euw0600198,
 OutboundConnectionResponse, 15/09/2008, 14:00:30, SMTPSVC1, EUW0600198, -, 93, 0, 21, 0, 0, -, -, 250-panel.abserver.es,
 OutboundConnectionCommand, 15/09/2008, 14:00:30, SMTPSVC1, EUW0600198, -, 93, 0, 4, 0, 0, MAIL, -, FROM:<correo@antiguos.org> SIZE=4480,
 OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 125, 0, 6, 0, 0, -, -, 250 Ok,
 OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 125, 0, 4, 0, 0, RCPT, -, TO:<paco@unifam.es>,
217.13.80.229, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 4672, 0, 81, 0, 0, -, -, 450 4.7.1 <vlopez@valor.es>: Recipient address rejected: Greylisted for 5 minutes,
217.13.80.229, OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 4672, 0, 4, 0, 0, RSET, -, -,
217.13.80.229, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 4718, 0, 12, 0, 0, -, -, 250 2.0.0 Ok,
89.17.197.16, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 171, 0, 156, 0, 0, -, -, 450 <euw0600198.eu.verio.net[81.19.108.49]>: Client host rejected: Greylisted for 240 seconds (see http://isg.ee.ethz.ch/tools/postgrey/help/unifam.es.html),
89.17.197.16, OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 171, 0, 4, 0, 0, RSET, -, -,
89.17.197.16, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 218, 0, 6, 0, 0, -, -, 250 Ok,
89.17.197.16, OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 234, 0, 4, 0, 0, QUIT, -, -,
89.17.197.16, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 281, 0, 7, 0, 0, -, -, 221 Bye,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 68375, 0, 6, 0, 0, -, -, 250 OK,
64.13.232.135, OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 68375, 0, 4, 0, 0, RCPT, -, TO:<correo@antiguos.org>,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 68578, 0, 12, 0, 0, -, -, 250 Accepted,
64.13.232.135, OutboundConnectionCommand, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 68578, 0, 4, 0, 0, DATA, -, -,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:31, SMTPSVC1, EUW0600198, -, 68765, 0, 54, 0, 0, -, -, 354 Enter message, ending with "." on a line by itself,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:33, SMTPSVC1, EUW0600198, -, 70750, 0, 26, 0, 0, -, -, 250 OK id=1KfCrw-0001D9-UI,
64.13.232.135, OutboundConnectionCommand, 15/09/2008, 14:00:33, SMTPSVC1, EUW0600198, -, 70765, 0, 4, 0, 0, RSET, -, -,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:33, SMTPSVC1, EUW0600198, -, 70937, 0, 12, 0, 0, -, -, 250 Reset OK,
64.13.232.135, OutboundConnectionCommand, 15/09/2008, 14:00:33, SMTPSVC1, EUW0600198, -, 70953, 0, 4, 0, 0, MAIL, -, FROM:<> SIZE=5749,
64.13.232.135, OutboundConnectionResponse, 15/09/2008, 14:00:33, SMTPSVC1, EUW0600198, -, 71140, 0, 6, 0, 0, -, -, 250 OK,
65.54.244.8, OutboundConnectionResponse, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, -, 234, 0, 309, 0, 0, -, -, 220 bay0-mc1-f13.bay0.hotmail.com Sending unsolicited commercial or bulk e-mail to Microsoft's computer network is prohibited. Other restrictions are found at http://privacy.msn.com/Anti-spam/. Violations will result in use of equipment located in California and other states. Mon, 15 Sep 2008 05:06:05 -0700 ,
65.54.244.8, OutboundConnectionCommand, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, -, 234, 0, 4, 0, 0, EHLO, -, euw0600198,
10.19.108.49, euw0600198, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, 10.19.108.49, 15, 32, 44, 250, 0, MAIL, -,  FROM: <correo@antiguos.org>,
10.19.108.49, euw0600198, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, 10.19.108.49, 0, 22, 24, 250, 0, RCPT, -,  TO: <anton@ua.es>,
213.4.149.224, OutboundConnectionResponse, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, -, 141, 0, 47, 0, 0, -, -, 550 5.1.1 <ja-rico@terra.es> recipient rejected,
213.4.149.224, OutboundConnectionCommand, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, -, 141, 0, 4, 0, 0, RSET, -, -,
213.4.149.224, OutboundConnectionResponse, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, -, 172, 0, 12, 0, 0, -, -, 250 2.0.0 OK,
10.19.108.49, euw0600198, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, 10.19.108.49, 47, 4230, 127, 250, 0, DATA, -,  <013301c9172a$67baa400$316c130a@euw0600198>,
10.19.108.49, euw0600198, 15/09/2008, 13:58:44, SMTPSVC1, EUW0600198, 10.19.108.49, 0, 4, 59, 240, 62, QUIT, -, euw0600198,

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