Question : Exchange 2003 will not send/receive

FUNDAMENTAL ISSUE
  Exchange 2003 running on Server 2003 on a new machine will not send / receive email, locally or externally.

HISTORY
  The site was running Exchange 5.5 on Small Business Server 4.5  Due to the limitations of SBS, data was migrated manually from the SBS server to the 2003 server. User Accounts were manually created on the new machine. Exmerge (two-step) was used to migrate Exchange data from the old machine users' accounts to the new machine user accounts. The same usernames were used on both machines to allow this process.

CURRENT SETUP:
  The new server is running all the base server functions of 2003 (File, Print, DHCP, DNS, WINS). I personally thought it was overkill to be running a DNS server for a company of 25 employees, but it seems that Active Directory prefers/requires it.

  We have DSL coming into the office, and that service provider has MX and DNS records that point the email to us. If our server is down, they queue the mail until our server is back up.

  DNS is setup to to forward external requests to the DNS servers of the service provider. The client machines in the office are setup to use the 2003 server as the DNS server.

  The 2003 server is running in a different domain than the SBS machine. During testing, we have been changing the IP address of the new server to what the old server uses (192.168.101.1) We havent changed any settings on the firewall, which have always allowed that particular IP to communicate via SMTP, etc.

TROUBLESHOOTING
  I can telnet into the service provider and talk to their email server oon port 25.

  I can do a nslookup using the service provider's servers and find our office, the MX records, the DNS pointers, etc.

  I have browsed through most of the info here on experts-exchange and tried out the majority of suggestions to similar problems. I can log onto the exchange server via telnet.

  I checked to see where the test emails went after I attempted to send/receive, and it looks like they hang out in the queue. I can see them in the queue directory, but in the exchange server MMC, I look in the queues and dont find them.

  It is possible I have DNS setup incorrectly, expecially the MX records. The DNS MMC is confusing, counter-intuitive, I would say.

  It is also possible that by migrating via ExMerge, the actual email user accounts themselves got a little screwy, perhaps with permissions. In fact, to even import the data into Exchange 2003, I not only had to create a new user account with rights on each of the mailboxes (which I had to set manually), I had to add the server object itself! (SERVER$)

Help would be appreciated. I will give any and all details needed.

Answer : Exchange 2003 will not send/receive

No MX record needed on the internal DNS server, external only