Switched from pop3 to smtp ~ can't send email unless we disable smarthost

Based on this:

http://social.technet.microsoft.com/Forums/en-US/smallbusinessserver/thread/786c99e3-7bae-47f6-a0a3-893684dd2f39/#3b69a65c-10ef-4742-844e-7e09d734a2f4

I converted to the SMTP mail... I also enabled the smart host.  Network solutions gave me contradictory advice: one tech told me port 25 is closed due to spamming, another said we could use it.

We couldn't send emails and would get this error:

The following organization rejected your message: cm-omr7.

cm-omr7 #550 Relaying not allowed ##

 I disabled the smart host, and alas! It works!  Do we need the smart host?