Make sure in the Windows IIS/SMTP virtual server, on the access tab, that relay restrictions are setup properly. Just add the server IP address that IIS should be relaying for. Also, you can use telnet.exe (windows) or some other telnet client to test connectivity to the server to find out where the communications break-down is taking place. If it's permissions from relay settings you will receive access denied errors. Let me know if you need instructions to telnet test connectivity.
General help
Help with SMTP on Win2003 server
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