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Emails sent to recepients not on SBS are bounced back

SBS2008. We use our ISP to host our emails. SBS uses POP3 Connector to download emails from our ISP email server.

We have a temp worker Sarah, who only needs an email account with our domain. So we createdsarah@ourdomain.com for her from our ISP web site.

Here are what the problems are

1. When our internal users send emails to Sarah@ourdomain.com, they were bounced back right away.
"#550 5.1.1 RESOLVER.ADR.RecipNotFound; not found ##"

2. When sending emails to Sarah from a gmail account, they were bounced back too.
Delivery to the following recipient failed permanently:
sarah@ourdomain.com
Technical details of permanent failure:
Google tried to deliver your message, but it was rejected by the server for the recipient domain ourdomain.com by mx.ourdomain.com. [xxx.xxx.xxx.xxx]. (our SBS public IP)

The error that the other server returned was:
550 5.1.1 User unknown

What could be the cause of this?

Thank you for your help!

Jack


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