Win2k3 Server sp1, IIS6, DNN4.4.1 (no AD integration), SQL Express

When we have users register (verified portal) or change their roles (with send notification) end user does NOT receive emails, yet when users register portal admin does receive email notification and test emails through host work fine.  Watching the real-time logs of our firewall the only SMTP traffic that is sent from the server is that when testing or anything to the portal admin as mentioned above. 

IIS \mailroot\badmail folder shows nothing when the expected messages to the users don't get delieverd. Yet, when using the newsletter feature and manually entering email addresses I get the following xxxxx.bad message in the badmail folder

Unable to deliver this message because the follow error was encountered: "This message is a delivery status notification that cannot be delivered.".

The specific error code was 0xC00402C7.

The message sender was <>.

The message was intended for the following recipients.
 user@abc.com

user@abc.com does exist.

Any thoughts would be greatly appreciated?
 

Have you tried verifying that your SMTP server is up and running properly? I did a quick google search and pretty much all said it was an issue with either CDONTS or the SMTP server on the box. Also, have you tried specifying an SMTP server along with username and password? Something along the lines of mail.yourdomainname.com user1/password1. This would hand off the responsibility of delivering the mail to a dedicated mail server rather than IIS's own SMTP server.