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Possible Duplicate:
IIS SMTP server (Installed on local server) in parallel to Google Apps

We have a website set up for www.clientname.com(and also clientname.com), running on a windows server 2008 machine. It's running IIS and has SMTP installed.

The client is using google apps for their email @clientname.com

The website sends mail through .net code, which sends out through the local SMTP server. Recently a problem came up.

When the website is sending out an email to address@clientname.com, instead of actually sending out the email, the SMTP service will drop the .eml file into c:/wwwroot/mailroot/drop

If I send out an email myself, it makes it to the clients email.

What is causing the SMTP service to do this?

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It sounds like you have clientname.com set up as a local domain on the W2K8 SMTP server when in fact it should be set up as a remote domain.