Found the answer to this for any who may run into this issue.

The problem was Exchange 2010 refusing the connection.

By default Exchange 2010 does not allow inbound unauthenticated mail by default.  This applies to All mail, not just mail from your application.  This is because Microsoft expects you to use an Edge Transport server.  if you do not, you need to adjust your default receive connector to allow "anonymous".  This will allow inbound mail and will not make you an open relay.

You can find this setting in the Exchange Management Console>Server Configuration>Hub Transport>Receive Connections-Default xxxx>Permission Groups: check the Anonymous Users box>OK