windows server 2008 - 550 Invalid HELO/EHLO must contain a FQDN or IPv6

I've got a Windows Server 2008 box where I host a number of websites (on different domains) that send email as part of their functionality.

I've been checking up on the SMTP events and found a number of warnings that look like this:

Message delivery to the host '219.88.242.10' failed while delivering to the remote domain 'orcon.net.nz' for the following reason: An SMTP protocol error occurred.
The SMTP verb which caused the error is 'HELO'. The response from the remote server is '550 Invalid HELO/EHLO must contain a FQDN or IPv6 literal in [].
'.

What does this mean?

I guess it has something to do with my SMTP setup. I'm just using the default SMTP server that comes with Windows.

If it is to do with my setup, is there anything else I should do to setup the SMTP server?

Cheers,
Charles

P.s. Is there a better (free) SMTP server I should be looking at? I'm using google apps for email so I don't need to receive emails, just send them.

Answer

If the FQDN of the server itself is something to the effect of "server.domain.local" (meaning it's only valid on your internal network), and the receiving server performs a rDNS or SPF check against the incoming email, it may continue to block the email. The way to overcome this is to set the outgoing FQDN on your server in the properties of the SMTP virtual server to something that is going to be valid externally, such as "mail.domain.com". Make sure to set up a rDNS and SPF record as well as an A record for this server in your external DNS forward and lookup zones (you will need to get your ISP to set up the rDNS record for you).