Relaying is a quite common problem. It means that a server allows somebody to send messages outside. It is desirable to allow sending messages only to your users. Thus you need to use antirelaying options not to allow spam and relaying thru your server to unwanted users (spammers) from outside. The error message "550 5.7.1 <>...we do not relay <>" means your anti relaying settings are incorrectly set and you simply cannot send messages thru your server out.
We do not suggest using any antirelaying options other than Relaying From, POP Before SMTP. All other anti relaying options in the Delivery tab sheet should not be used. Switch on all of the 3 options and into the Relaying From field enter:
127.0.0.1;192.168.*.*;10.*.*.*;172.16-31.*.*
That means all of these IP addresses will be able to relay. All of them are LAN IP addresses. It's also suggested to specify the server's IP address in the field too. By this your LAN will be able to send messages out just fine.
Sometimes you might need to allow relaying for your customers outside your LAN. That is a small problem but can be solved. Usually all relaying is IP address based. Just like on your LAN. ISPs know their IP addresses and allow relaying from all of these addresses. It is suggested for users from outside to use their ISP's mail server to send messages out. Sure, but you want them to use your mail server. You can use 2 options on your server to fix this. Either the POP Before SMTP or SMTP Authentication. Using Relaying From is not possible because the IP addresses of your external users are unknown and change dynamically.
POP Before SMTP
The user needs to check his mail before sending messages out. The server will record the user's IP and for some period of time will allow sending messages out from the IP. The problem is that most of the mail clients (Outlook Express) sends messages first and then receives. Users would need to rememebr to check for messages manually before sending.
SMTP Authentication
This is a more professional way of allowing external users to relay thru your server. The user will authenticate during the SMTP session and by that the server knows it is a legal user and will let him relay. The thing is that users need to configure their mail clients to use the SMTP authentication and you also need to switch off the Disable SMTP Auth option in the Security tab sheet. This option works in conjunction with the Relaying From control. The Relaying From control needs to be switched on otherwise no authentication will be required. The IPs specified in the Relaying From control do not need to SMTP AUTHenticate. All other IPs have to authenticate in order to relay messages.
How to set SMTP Authentication at the Outlook Express.
Create the regular account at the Outlook Express client first.

The account mail.icewarp.com has beed created by using Outlook Express Wizard.
Click on the Properties Button and select tab Servers.

Check Option My server requires authentication and press button Apply. The same username/password as for the incoming mail will be used by default. If you want ot use different one, you can specify it by the pressing button Settings.

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It is strongly recommended to use SMTP Authentication by the all DIAL-UP users.
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Notes:
Watch the difference in the SMTP protocol (log files) with and without SMTP Authentication.
If the authentication is on, Merak uses ESMTP protocol (starting with EHLO).