I have also seen this error in the Forums as a "can not relay" error but here is the setup. Exchange 2003 SP1 SMTP and OWA work fine but replying through POP3 gives me the Error 550 5.7.1 Your email has been rejected because your mail server recently sent email to an invalid email address. We suspect your mail server is trying to send us junk mail. The originating email was from my Yahoo account to my home Exchange account and pulled from work via POP3. Replying to the POP3 Yahoo email returns the error. I do have a antispam program, Fluffy,fielding incoming SMTP messages on port 25 but POP3 uses 110 and I shouldn't be getting this error. Yes, I do have my work IP address in the Allow Relay section of Properties. Any help is appreciated here.

your right POP3 does use port 110, but POP3 is for receiving mail. POP3 does not send mail. SMTP sends mail. When you POP your yahoo mail into your Outlook client and then reply to one of those messages you are esentially trying to tell your Exchange system to send an SMTP message to joe.user@whatever.com from youraccount@yahoo.com. Well your SMTP server is not allowed to send as yahoo.com. the receiving email systems will surely reverse lookup and see that you are not yahoo.com and reject it as spam. In outlook you need to configure your yahoo.com connection to use yahoo's smtp server, but only for that POP/SMTP connection. You surely don't want your work email trying to relay of Yahoo, they may frown on that.

I can understand that the Error 550 can be very frustating because I under went such kind of problem in the past. I was unabel to access my emails and the other documents that were located on the server. This message generally occurs while running the eseutil.exe command or while starting the Microsoft Exchange Information Store Service. In order to fix the problem, the users should run the eseutil /r with the help of which the corrupted database files can be fixed. If this method does not yield any kind of desirable results, then the eseutil /d should be used to defragment the database. This hardware repair command checks up to 4 kilo byte of database pages to make them error free. During this procedure if it detects any kind of error which it is unable to solve, then it proceeds further by discarding the page. But you should know that the command eseutil /r should be used very carefully becuase there are chances that the files from the server can get deleted. I ran the command and some of my files did get deleted which made matter worse for me. Then after the recommendation of my friend, I used a tool called Exchange Server Recovery that fixed all the corruption. The demo version is available and you can certainly try that. If the problem of yours is solved, then opt for the full version. All the Best..!!!