(relay for local hosts only, still having the problem) (relay for local users only, still having the problem)
Those are "spammer friendly" settings -- they allow spammers to relay mail through your server.
The first step to fixing the problem is to use "Relay for Addresses" or "No Mail Relay" (where everyone has to use SMTP AUTH). If you're just using the other settings briefly to debug the problem, that's fine. But don't think about leaving the relay settings at anything except "Relay for Addresses" or "No Mail Relay".
-Scott
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