Note, before you read this, you should have an SMTP edge server in front of your Exchange Server. These details are for those of you that don't have an SMTP filter, can't afford one or just can't fix your SMTP blobbing issues any other way. I've had to do this twice recently, so thought I'd blog it.
Basically, if you start seeing a bunch of XEXCH50 errors in your logs and can't receive emails from a foreign domain (usually running Exchange by the way), or can't receive messages with attachments (in our case, over 256kb in size), you may need to 'dumb down' your SMTP verbs in Exchange.
Reference: http://support.microsoft.com/kb/257569
Reference: http://support.microsoft.com/kb/843106/en-us
In my case, a client had a Sonicwall with old firmware that was gobbling up emails and not letting the SMTP complete its little chat.
So, to resolve this (until we can deal with the Sonicwall), do the following (again, try and use a real SMTP gateway instead):
1. cd "c:\Program Files\Exchsrvr\bin" (or wherever your path is)
2. regsvr32 /u peexch50.dll
3. iisreset
By the way, to determine before and after....
Before doing the above, do the following...
telnet localhost 25.
Then issue the command "ehlo somewhere.com"
If 250-EXEXCH50 is there, then the EXCH50 sink is enabled
After the change, do the same - you should see that it is gone...
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