To those that may run into the issue:
The Watchguard firewall (hardware firewall) features a SMTP/POP proxy service that can cause you issues. You will receive mail normally but when your clients try and send email on port 25 (from outside the firewall/DMZ) they will receive errors in Outlook saying:

The message could not be sent because one of the recipients was rejected by the server. The rejected e-mail address was '[email protected]'. Subject 'test email ', Account: 'mail.test.com', Server: 'mail.test.com', Protocol: SMTP, Server Response: '553 Requested action not taken: mailbox name not allowed or chunk too large', Port: 25, Secure(SSL): No, Server Error: 553, Error Number: 0x800CCC79

And you will see this in the QMT SMTP logs:

@4000000049f7e4891f360f14 tcpserver: pid 20516 from 263.299.178.229
@4000000049f7e4891f382a24 tcpserver: ok 20516 db3:10.10.0.12:25 :263.299.178.229::3482 @4000000049f7e48a194cebcc CHKUSER accepted sender: from <[email protected]::> remote <etg91:unknown:263.299.178.229> rcpt <> : sender accepted @4000000049f7e48a3142fc1c CHKUSER rejected relaying: from <[email protected]::> *_remote <etg91:unknown:263.299.178.229> rcpt <[email protected]> : client not allowed to relay
_...@4000000049f7e48c105caad4 tcpserver: end 20516 status 0
@4000000049f7e48c105cc244 tcpserver: status: 0/100



This will cause outgoing mail to fail when authenticating on port 25, but will function correctly on port 587. This caused some hair to plug up my keyboard from pulling it for a couple hours - the client never made me aware there was a SMTP proxy in place. I found out when I attempted to telnet into their IP address and did not receive the SMTP greeting that I was expecting.

Hopefully this will help someone else in the future.

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