Many server-based applications have the capability to send an email to inform a user of an issue or status update. For example, our PanatrackerGP application has the ability to automatically send an email in the event of an eConnect problem while submitting a transaction. As an internal server, your Exchange server may be blocking the ability for your server to send to addresses OUTSIDE of your own domain. This is commonly referred to as “relaying” because you are relaying a message from an internal server to others outside of your email domain.
Configuring Exchange to allow relaying is a fairly simple process. Like any process, it seems to be easier with pictures. TheExchange Team Blog published a great article on this a while ago, and I find myself frequently sending this link to customers.
Here's a link to it: http://blogs.technet.com/b/exchange/archive/2006/12/28/3397620.aspx