Exch 2k3 wont send xml files generated by finance system

[hospitalcase]

I am trying to get xml files generated by our finance system to be emailed to our suppliers.
When I test the system internally it works fine, however when i try to send them to any external recipient I get the error message below.

Email clients are outlook 2003
Exchange server 2003 sp1
authentication is set to anonymous on the smtp virtual server.

Is there some setting within exchange that needs tweaking or changing??

thks in advance.

Started Test [26-Mar-2007 12:01:21]
Testing Environment : TEST
Using EROS5
DataSource = test_32
Username = test
Password = ************
Connection String = ODBC;DSN=test_32;UID=test;PWD=**********
Connected to Database OK
Testing Mail Server : mail101
Using Test EMail Address : @yahoo.ie
Using Test EMail From Address : xyz.ie
Not Using ESMTP. : 0
Setting SMTP Domain Property To : abc.ie
Setting EMail From Address to : xyz.ie
Adding Recipient : @yahoo.ie
Domain = .ie
Connecting to mail server (mail101)
Connected to mail server (mail101)
Domain = .ie
Sending Test Message
===>Error 8 - Invalid 'TO' address (xbc@yahoo.ie)
Error - EMail Server not validated
Completed Test [26-Mar-2007 12:01:22]