How to Prevent the IIS SMTP Virtual Server from Relaying E-mail Messages

1) Start Internet Information Services Manager or open the Internet Information Services (IIS) snap-in.

2) Expand Server_name, where Server_name is the name of the server, right-click Default SMTP Virtual Server, and then click Properties.

3) Click the Access tab, and then under Access control, click Authentication.

4) Click to select either or both the Basic authentication and the Integrated Windows authentication check boxes, click to clear the Anonymous access check box (if it is selected), and then click OK.

By doing so, authentication is required before access is granted to the SMTP virtual server. In this case, if the user or computer does not successfully authenticate, the user or computer cannot send mail to the server.

NOTE: If you click to select the Anonymous access check box and do not click to select the Basic authentication and the Integrated Windows authentication check boxes, all users and computers are able to access the SMTP virtual server.

6) Note the options that are available in the Relay Restrictions dialog box. By default, the Only the list below option is selected and this list is empty. Additionally, the Allow all computers which successfully authenticate to relay, regardless of the list above option is selected. With this feature, users and computers that can authenticate with the server can relay through the server. All computers are blocked except those that meet the authentication requirements that you configured earlier in the Authentication dialog box of the Access tab.

Note that if you allow only anonymous access, the server does not authenticate users or computers.

7) Click Add, and then do one of the following to add a single computer, group of computers, or a domain:

Click Single computer.

Type the IP address of the computer that you want in the IP Address box, and then click OK.

Click Group of computers.

Type the subnet address and the Subnet mask of the group into the corresponding boxes, and then click OK.

Click Domain.

Type the domain name that you want in the Name box, and then click OK.

If you do not want to add a computer, group or computers, or a domain, click Cancel.

8) Click OK, and then click OK.

Thanks to omkars from Ev1 forums