SMTP via .NET program failure

I have a program that handles vacation/sick requests which was recently moved from Server 2003 (IIS 6) to a new Server 2008 (IIS 7.5)

The notification email for when a user requests absence is no longer functioning.
 - It does however work for domain administrators!

I can ping and Telnet to the SMTP server which led me to believe it was a permission issue.
-I tried creating a new mailbox (Requests@domain) with everyone having full access permission
-I created a new receive connector allowing anonymous connection from the server IP




The program (SMTP Piece):

Dim email As New System.Net.Mail.MailMessage()
Dim client As New SmtpClient
client.UseDefaultCredentials = False
client.Credentials = New System.Net.NetworkCredential("username", "password")
client.DeliveryMethod = SmtpDeliveryMethod.Network
client.Host = AppSettings("SmtpServer")
email.From = New MailAddress("username@domain.com")
email.From = New MailAddress(AppSettings("EmailFrom"))
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This is the output if the user is not a domain admin:

[SocketException (0x277b): A system call has failed ***.***.***.***:25]
   System.Net.Sockets.Socket.DoConnect(EndPoint endPointSnapshot, SocketAddress socketAddress) +273
   System.Net.ServicePoint.ConnectSocketInternal(Boolean connectFailure, Socket s4, Socket s6, Socket& socket, IPAddress& address, ConnectSocketState state, IAsyncResult asyncResult, Exception& exception) +584

[WebException: Unable to connect to the remote server]
   System.Net.ServicePoint.GetConnection(PooledStream PooledStream, Object owner, Boolean async, IPAddress& address, Socket& abortSocket, Socket& abortSocket6) +8593522
   System.Net.PooledStream.Activate(Object owningObject, Boolean async, GeneralAsyncDelegate asyncCallback) +8593954
   System.Net.ConnectionPool.GetConnection(Object owningObject, GeneralAsyncDelegate asyncCallback, Int32 creationTimeout) +3016971
   System.Net.Mail.SmtpConnection.GetConnection(ServicePoint servicePoint) +286
   System.Net.Mail.SmtpClient.Send(MailMessage message) +1500

[SmtpException: Failure sending mail.]
   System.Net.Mail.SmtpClient.Send(MailMessage message) +2392407
   GlobalFunctions.error_email(String txtst, String txtmsg, String user) in C:\inetpub\wwwroot\Intranet\Requests\App_Code\GlobalFunctions.vb:114
   _Default.btnSubmit_Click(Object sender, EventArgs e) in C:\inetpub\wwwroot\Intranet\Requests\Users\Users.aspx.vb:401
   System.Web.UI.WebControls.Button.RaisePostBackEvent(String eventArgument) +155
   System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint) +3804