Created a new distribution group on Exchange 2007 or SBS 2008. Internal emails are delivered, but external rejected with bounce “550 System error“.

Problem may be caused by “Require that all senders are authenticated” option in distribution group properties.
Exchange Management Console (EMC) > Recipient Configuration > Distribution Group > [name] > Properties > Mail Flow Settings > Message Delivery Restrictions – Require that all senders are authenticated
If you want to receive external emails this option must be unchecked.

The same option could also prevent external email delivery to user mailboxes and other exchange objects.

MS Exchange 2007
MS Small Business Server 2008