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following these steps resolved the issue:

1. Click Start, click All Programs, click Microsoft Exchange Server 2007 and click Exchange Management Shell.
2. Run the following cmdlet to view the current setting of the default domain value on your receive connector:Get-ReceiveConnector -identity flIn the output, notice that the value of DefaultDomain is blank by default.
3. Run the following cmdlet to set the default domain value:Set-ReceiveConnector -identity “” -DefaultDomain “”For example, Set-ReceiveConnector -identity “Default EX2007MAIL” -DefaultDomain “contoso.com”
4. Run Get-ReceiveConnector -identity fl cmdlet again and verify that the DefaultDomain has been set in the output