OK I actually have some of this working.
I had the wrong field in one of my mysql statements which was giving me the error. Not sure how that happened because I was copying and pasting from the tutorial. Oh well.
Now I can send email from telnet. I sent a test message to my gmail account and received it fine. When I replied to the email that also worked. I have Outlook setup with POP3 and it receives fine but when I attempt to send and email using Outlook it gives me an immediate response back saying message could not be delivered
550 5.1.1 <email@example.com> User unknown; rejecting
I also changed my hosts file and my interfaces file.
interfaces was missing auto eth0
and I added my static IP into the hosts file
xx.xx.xx.xx mail mail.example1.com