Mail enabling Sharepoint 2007 documents store using seprate Exchange 2007 server

I have a problem mail enabling a Sharepoint 2007 documents library to allow external users to email documents directly to the store, the setup is detailed below:

Setup: There is 1x Exchange 2007 box , 1x SharePoint 2007 box and 1x AD server

Also be aware of the following points:

1. I have the IIS SMTP server service enabled on Sharepoint server, with anonymous access enabled (as per MS guide)
2. I have configured this to only allow the exchange server (EXCHANGE01) to accept relay.
3. I have created send/ receive connectors in exchange and specified the SharePoint server IP, in both of the remote domain sections.  
4. I am using  SharePoint Directory Management Service  to create a mail enabled contact in AD, this creates fine and I then assign a SMTP address to the contact in the exchange management console.
5. The exchange 2007 server can send and receive internet mail fine, MX records are working for the domain.
When I  attempt to send an email though exchange to the contact address that has been created though SharePoint it returns the following error:

#554 5.4.6 Hop count exceeded - possible mail loop ##

Is there a way to fix this so the exchange server handles the incoming mail then relay's specific mail to the SharePoint server based on the contact address created by SharePoint document library, hence enabling the document store mail functionality?
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That's how the directory management service is supposed to work (create the necessary contacts) but i find that it is sloppy, less control (more risk), etc.  Instead, I manage my manually.
1. Email enable your document library and give it an email address (such as
2. Make sure is a valid A record in DNS (you can ping it validly by name)
3. Create a contact in Exchange whose email address is (so it knows where to forward). Set whatever friendly lname you want for this library such as (notice the servername part is gone)
4. Finally, I run into this often, make sure you have set your SMTP aliasing right on the SharePoint Server in SMTP/IIS.
  1. Go into IIS/SMTP.
  2. Open up 'Domains'.
  3. Right click and choose New -> Domain...
  4. Add an 'alias' for the domain ( as it is expecting only to see emails for
  5. Choose Finish
Hope that helps.

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steffik1354Author Commented:
Excellent, thanks.. seems to be working now based on the steps above, I can now email documents to the library using - rather then

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