Undeliverable Emails Outlook

This is my situation currently a user of mine is having an issue with sending emails to certain email addresses but not others. I will lay out what the situation is then provide the errors I am getting.

My client has their email hosted with Rackspace, but they want it moved to their Exchange 2010 server on SBS 2011. To do this I created a pop connector for them in SBS2011 to POP the email over temporarily while I move other users from their Rackspace to Exchange. 

My client receives emails with no problem, but she is having issues sending to certain email addresses and she uses Outlook 2013. We will say my clients email address is ksmith@zzz.com. It seems to be that when she sends emails to zzz.com domain for emails that haven't been switched to exchange she gets an NDR from the Exchange Server. Below is the report it gives. Basically what happens every time she sends and email to anyone she has setting in Outlook that Bccs this email address in salesnexus@zzz.com.  I have tried sending emails through OWA and Outlook and get the same NDR for the salesnexus@zzz.com. What I am trying to figure out if this is an issue with Rackspace or something with exchange.

Delivery has failed to these recipients or groups:

salesnexus@zzz.com (salesnexus@zzz.com) The e-mail address you entered couldn't be found. Please check the recipient's e-mail address and try to resend the message. If the problem continues, please contact your helpdesk.

Diagnostic information for administrators:

Generating server: SMARTSERVER.zzz.local

salesnexus@zzz.com #550 5.1.1 RESOLVER.ADR.RecipNotFound; not found ##

Original message headers:

Received: from SMARTSERVER.zzz.local ([fe80::7969:1feb:b407:d668]) by

 SMARTSERVER.zzz.local ([fe80::7969:1feb:b407:d668%16]) with mapi id

 14.01.0438.000; Tue, 4 Nov 2014 11:17:42 -0600

Content-Type: application/ms-tnef; name="winmail.dat"

Content-Transfer-Encoding: binary

From: Kayla Smith <KHall@zzz.com>

To: Aliah Person <APerson@yyy.org>

Subject: RE: ARC GLs and Worksheet

Thread-Topic: ARC GLs and Worksheet

Thread-Index: Ac/4RbuKfbFvb38uQO6250Pu0w9LhQACTREQAAAzsaAAAOZToA==

Date: Tue, 4 Nov 2014 11:17:40 -0600

Message-ID: <712CB734F083BD47B560A32737557A4BB85987F4@SMARTSERVER.sss.local>

References: <99DCB19E90E72C4FBE2348D2E1FC633F1AB1FC@ARCServer2.ARC.local>

<712CB734F083BD47B560A32737557A4BB8598724@SMARTSERVER.sss.local>

<99DCB19E90E72C4FBE2348D2E1FC633F1AB2A7@ARCServer2.ARC.local>

In-Reply-To: <99DCB19E90E72C4FBE2348D2E1FC633F1AB2A7@ARCServer2.ARC.local>

Accept-Language: en-US

Content-Language: en-US

X-MS-Has-Attach:

X-MS-TNEF-Correlator: <712CB734F083BD47B560A32737557A4BB85987F4@SMARTSERVER.sss.local>

MIME-Version: 1.0

X-Originating-IP: [10.1.10.185]

Matthew Brichetto