Following the creation of a new distribution group under Microsoft Exchange Server 2007, members of the group were receiving the following error when sending emails from that address:

Delivery has failed to these recipients or distribution lists:

sender@domain.com

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.

Sent by Microsoft Exchange Server 2007

Diagnostic information for administrators:
Generating server: domain.com
sender@domain.com
#550 5.7.1 RESOLVER.RST.AuthRequired; authentication required ##rfc822;sender@domain.com
Original message headers:

The failure and resultant message is generated as a result of the defaults set against the creation of distribution groups.

To resolve this from the Exchange 2007 Management Console navigate to Recipient Configuration -> Distribution Group -> Right Click on the Distribution Group then click on the Mail Flow Settings tab and double-click the Message Delivery Restrictions option.

Uncheck the box that reads “Require that all senders are authenticated” then click OK then OK again. This should now allow the senders to send the messages successfully. It can take a few minutes for the change to be registered (it took about 15 minutes on our system).