AIX sendmail gets "connection refused" by W2K server

[texasitalian]

Newbie here,
I have an AIX p-server sendmail working fine for 2-3 weeks then ( I believe after I was trying to tighten security settings on W2k server) I began getting this message:
Message 52/59 From Mail Delivery Subsystem Oct 01, 03 05:11:14 AM -0500


Date: Wed, 1 Oct 2003 05:11:14 -0500
To: root
Subject: Returned mail: see transcript for details
Auto-Submitted: auto-generated (failure)

This is a MIME-encapsulated message

--h91ABCC386540.1065003074/aixserver.mydomain.com

The original message was received at Fri, 26 Sep 2003 05:00:00 -0500
from root@localhost

----- The following addresses had permanent fatal errors -----
username@mydomain.com

----- Transcript of session follows -----
username@mydomain.com... Deferred: Connection refused by mydomain.com.
Message could not be delivered for 5 days
Message will be deleted from queue

--h91ABCC386540.1065003074/aixserver.mydomain.com.
Content-Type: message/delivery-status

Reporting-MTA: dns;mydomain.com.
Arrival-Date: Fri, 26 Sep 2003 05:00:00 -0500

Final-Recipient: RFC822; username@ mydomain.com.
Action: failed
Status: 4.4.7
Remote-MTA: DNS; mydomain.com.
Last-Attempt-Date: Wed, 1 Oct 2003 05:11:14 -0500

--h91ABCC386540.1065003074/aixserver. mydomain.com.
Content-Type: message/rfc822

Return-Path: <root>
Received: (from root@localhost) by aixserver.mydomain.com (AIX5.2/8.11.0/8.11.0)
id h8QA00O375152 for username@mydomain.com; Fri, 26 Sep 2003 05:0
0:00 -0500
Date: Fri, 26 Sep 2003 05:00:00 -0500
From: root
Message-Id: <200309261000.h8QA00O375152@aixserver.mydomain.com>
To: username@mydomain.com
_______________

I can e-mail from my aix server to an outside e-mail address, but not to my local network e-mail server running Exchange 5.5.
What must be allowed on my firewalls, if any, to allow sendmail (in case I am blocking sendmail on my firewall)
At wits end.