On my 2008 windows server standard r2 i am getting this erro 5504 being logged several times per day. This is the only domain controller and dns server in the domain. The server is not set up for any forwarders and just uses the root hints.
I have seen several articles saying could be firewall, you should set the forwarder to your isp. But none of these people seem so definte in their answer so i will try this.
Here is one of the errors.
The DNS server encountered an invalid domain name in a packet from 126.96.36.199. The packet will be rejected. The event data contains the DNS packet.
For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp