#5.7.1 SMTP; 550 5.7.1 Requested action not taken: message refused

I have 2 email servers inside my network. Exchange 2003 Server on Windows
2003 and a Sendmail server running under Linux. Both are inside the firewall
and both have 1 to 1 NAT setup on the firewall for outside access. When
someone tries to send out email from the Linux server, it works perfectly
sending to anyone outside of the Exchange system. Anyone inside the Exchange
system will intermittently get a bounce email stating:

Received: from yyy.mydomain.com ([xx.xx.xx.130]) by XXX.mydomain.com
with Microsoft SMTPSVC(6.0.3790.0); Fri, 27 Aug 2004 09:23:44 -0400
MIME-Version: 1.0
Content-Type: multipart/report; report-type=delivery-status;
boundary="----_=_NextPart_001_01C48C39.13BB7CB3"
Received: from localhost (localhost) by yyy.mydomain.com
(8.12.11/8.12.11) id i7RDO8wA026790; Fri, 27 Aug 2004 09:24:08 -0400
X-MimeOLE: Produced By Microsoft Exchange V6.5.7226.0
Auto-Submitted: auto-generated (failure)
Return-Path:
X-OriginalArrivalTime: 27 Aug 2004 13:23:44.0357 (UTC)
FILETIME=[13A12950:01C48C39]
Content-class: urn:content-classes:dsn
Subject: Undeliverable:[Bug 2589] New: Missing Device Codes
Date: Fri, 27 Aug 2004 09:23:44 -0400
Message-ID:
X-MS-Has-Attach: yes
X-MS-TNEF-Correlator:
Thread-Topic: [Bug 2589] New: Missing Device Codes
Thread-Index: AcSMORO7jpiPhZSfTTGKjSR7NrYk/gAAAACT
From: "System Administrator"
To: "Scottg"
X-Evolution-Source: /

This is a multi-part message in MIME format.

------_=_NextPart_001_01C48C39.13BB7CB3
Content-Type: text/plain; charset="iso-8859-1"
Content-Transfer-Encoding: quoted-printable

Your message

To: Bill
Subject: [Bug 2589] New: Missing Device Codes
Sent: Fri, 27 Aug 2004 09:24:07 -0400

did not reach the following recipient(s):

Bill on Fri, 27 Aug 2004 09:24:08 -0400
You do not have permission to send to this recipient. For assistance,
contact your system administrator.
yyy.mydomain.com #5.7.1 SMTP; 550 5.7.1 Requested action not
taken: message refused


Thanks for any help