Delivery has failed to these recipients or distribution lists:

[email protected]

Your message wasn't delivered because of security policies. Microsoft Exchange will not try to redeliver this message for you. Please provide the following diagnostic text to your system administrator.

At the beginning of the detailed diagnostic message it states, "#550 5.7.1 RESOLVER.RST.AuthRequired; authentication required ##."

I should point out that the distribution group works fine for users inside the company. How can I fix this error?

Answer:
In your case, you're using Exchange 2007 and the senders are vendors from outside your organization. By default, when you create a distribution list, the delivery is restricted to users that are authenticated. When you use the distribution list inside your organization, it works fine because the users are authenticated -- but the outside vendors aren't.

Here's what you can do to fix the problem:

1. Go to the distribution list's Properties.
2. Click on the Mail Flow Settings tab.
3. Double-click Message Delivery Restrictions.
4. Uncheck the box "Require that all senders are authenticated."

There's no need to restart the computer or any of the services. Your users in the distribution list should now be able to receive messages from outside vendors.