Guys,

Have you checked to see that the computer you are working from is allowed 
to relay messages through the SMTP server you are using.

I have a web app that is doing a similar thing and was only able to get 
messages internally until I went to the mail server (exchange 2000 sp3) 
and went to "smtp virtual server" >> "properties" >> "access" >> "relay" 
and granted relay permission to the server that my web-app was on.  once I 
did that the messages started getting through.

This is probably diabled so external people don't connect to the smtp 
server and broadcast spam messages.

Anyway, it worked for me.  Hope it works for y'all.

Cheers from Austin.