I seem to be having problems with SMTP mail on an OTRS system I've inherited now it's not working

Incoming email is working fine but outgoing email errors as below (this has worked before apparently)
I've had a look round the Board and it seems this is usually an authentication issue or network communication.
I've checked the sysconfig > group framework > Core:sendmail settings, here SMTP is selected, the server field is populated with the FQDN of the Server, with no ticks in the username and password fields.
To test relay I've logged in as the service account that's running the Apache Server (not sure if this is important) and have telnetted port 25 of the email server (Exchange 2007) without problems. I've also manually typed in the SMTP commands to send an email to ensure the server is allowing relay from the OTRS server.
Is there and additional settings that could effect this? is there an underlying config file I could check the settings that are being applied?
Any help much appreciated.
Matt.
Backend ERROR: OTRS-CGI-10 Perl: 5.12.2 OS: MSWin32 Time: Thu Mar 10 20:48:42 2011
Message: Can't connect to Servername: Bad file descriptor!
Traceback (3956):
Module: Kernel::System::Email::SMTP::Send (v1.29) Line: 117
Module: Kernel::System::Email::Send (v1.70) Line: 682
Module: Kernel::System::Ticket::Article::ArticleSend (v1.266) Line: 2031
Module: Kernel::Modules::AgentTicketForward::SendEmail (v1.95) Line: 817
Module: Kernel::Modules::AgentTicketForward::Run (v1.95) Line: 83
Module: Kernel::System::Web::InterfaceAgent::Run (v1.58) Line: 838
Module: ModPerl::ROOT::ModPerl::Registry::C_3a_Program_20Files_OTRS_OTRS_bin_cgi_2dbin_index_2epl::handler (unknown version) Line: 51
Module: (eval) (v1.88) Line: 204
Module: ModPerl::RegistryCooker::run (v1.88) Line: 204
Module: ModPerl::RegistryCooker::default_handler (v1.88) Line: 170
Module: ModPerl::Registry::handler (v1.99) Line: 31