SMTP relay (IIS 6) with Office 365 not working - 550 5.7.1

Hi,

I hope someone can help me to get an SMTP relay working. At the moment, we are in a hybrid Office 365 setup with 2007 and 2010 on-premise Exchange servers. We are looking to decommission these as soon as possible so I am trying to get an SMTP relay working and have more or less followed these instructions: http://www.getoffice365trial.com/configure-office-365-smtp-relay/

To test this, we have a UPS that sends notifications via SMTP. I changed the SMTP server address to the IP of the machine I have setup as the relay and, according to the UPS, the mail sends. But it's never received. If I look at the logs, it shows:

132.245.210.2 - OutboundConnectionResponse [16/Apr/2014:13:24:29 +0000] "- -?250 2.1.5 Recipient OK SMTP" 0 22
132.245.210.2 - OutboundConnectionCommand [16/Apr/2014:13:24:29 +0000] "BDAT -?2391 LAST SMTP" 0 4
132.245.210.2 - OutboundConnectionResponse [16/Apr/2014:13:24:34 +0000] "- -?550 5.7.1 Client does not have permissions to send as this sender SMTP" 0 65

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I think this is because, in the outbound security section on the relay I have it set to "Basic Authentication" and the account details that are in there probably don't have permissions to send as the address the UPS sends as. I tried changing this from Basic Authentication to Anonymous Access and get this in the logs:

157.56.253.6 - OutboundConnectionCommand [16/Apr/2014:13:48:17 +0000] "MAIL -?FROM:<> SIZE=2364 SMTP" 0 4
157.56.253.6 - OutboundConnectionResponse [16/Apr/2014:13:48:22 +0000] "- -?530 5.7.1 Client was not authenticated SMTP" 0 38
157.56.253.6 - OutboundConnectionCommand [16/Apr/2014:13:48:22 +0000] "QUIT - SMTP" 0 4

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Also, if I just drop a test file into the pickup folder it generates a .bdr file in the Badmail folder that states:

U n a b l e  t o  d e l i v e r  t h i s  m e s s a g e  b e c a u s e  t h e  f o l l o w  e r r o r  w a s  e n c o u n t e r e d :  " E r r o r  i s  p r o c e s s i n g  f i l e  i n  p i c k u p  d i r e c t o r y . " .


T h e  s p e c i f i c  e r r o r  c o d e  w a s  0 x C 0 0 4 0 2 C E .

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I'll happily provide all the setup details if needed. Can anyone point me in the right direction please?

Thanks in advance.