Unable to Relay - sending through smtp from IIS app

Our development group uses jira website and they have setup the smtp to our exchange server. It is able to send emails internally, but when they try to send to an external email address they get the following info in the log...

An error has occurred with sending the test email:
com.atlassian.mail.MailException: javax.mail.SendFailedException: Invalid Addresses;
  nested exception is:
      com.sun.mail.smtp.SMTPAddressFailedException: 550 5.7.1 Unable to relay

I have tried adding the server IP address to the connector, but it doesn't send out to an external email address. This stopped working once we found out we were an open relay with our default connector and turned that off.

We are using Exchange 2007
paulkatzAsked:
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Rick FeeMessaging Engineer - Disaster Recovery EngineerCommented:
I recommend follow this artice:  http://msexchangeteam.com/archive/2006/12/28/432013.aspx   This works everytime...

Question is the sending server that is hosting the website a VM?    I have seen denied because it sees the host IP
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stanley_starsCommented:
Check your receive connectors Authentication and Permissions tab. I believe that for the authentication you can use Externally Secured only and for Permissions make sure Anonymous Users is selected at a minimum.
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GundogTrainerCommented:
can you prove you can connect to the server from command line from the server with the code running.
Also if its on the same server you may need to ad 127.0.0.1 as well as the actual IP.

(replace the server name below)
telnet <smtp server name here> 25
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Rick FeeMessaging Engineer - Disaster Recovery EngineerCommented:
I would create a new receive connector called JRE Relay or something like that and follow the article:

http://msexchangeteam.com/archive/2006/12/28/432013.aspx

You will have to select anonymous for the connector if not authenticating and run shell command:  Get-ReceiveConnector "JRE Relay" | Add-ADPermission -User "NT AUTHORITY\ANONYMOUS LOGON" -ExtendedRights "ms-Exch-SMTP-Accept-Any-Recipient"
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paulkatzAuthor Commented:
I set a receive connector to accept from only that server IP, set the authentication to externally secured and permissions to anonymous and exchange servers (which is needed), but still cannot relay.

The jira mail server configuration does ask for a "from address"; does this have to be a mailbox within our server (they set it up as jira-noreply@<ourdomain>.com)
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Rick FeeMessaging Engineer - Disaster Recovery EngineerCommented:
Externally secured is not correct unless your using IPsec or something along these lines.   This is all internal correct?   Typically I leave the defaults like TLS, Basic Auth, Basic Auth only after TLS, Exchange Server auth, and intergrated auth....

you ran the shell command?

Get-ReceiveConnector "JRE Relay" | Add-ADPermission -User "NT AUTHORITY\ANONYMOUS LOGON" -ExtendedRights "ms-Exch-SMTP-Accept-Any-Recipient"
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paulkatzAuthor Commented:
I followed the steps from the microsoft kb article and created a new receive connector, yet I still get the same error; what am I missing?
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