When trying to send mail (to email addresses within the domain) using PHP's mail() function on my new Exchange 2010 server I get the error:
mail(): SMTP server response: 501 5.1.3 Invalid address
I tried creating a new receive connector with anonymous authentication but that doesn't seem to help, and honestly I have little to no experience with Exchange Server.
The address is valid, btw.
Try adding this on top:
ini_set("sendmail_from", "email@yourdomian.com");
It'll work