I have noticed some weird things!
Keep in mind that we are using shared hosted exchange. I did use hosted service providers SMTP address unauthenticated way but I had issue to sending email outside! (please refer to this case:
So I tried to play with it, change it, authenticate it etc...then I found that even if I type any name as SMTP server(like test,test.com) and even I have stopped virtual SMTP server on IIS-6, the effect is same! I could send email to internal staff but not outside domains like Gmail yahoo etc...
How it possible ?