In your case it's trying to send directly to the remote server. It will do an MX lookup of the domain servers and try to connect to servers in order. If it can't connect and send mail, it will error, like you've described. Are you sure you typed your addresses correctly? Are you sure the domains have valid MX records that point to valid servers? Are you sure your ScreenConnect server can connect outbound over port 25? Have you tried with addresses at different domains to see if any of them work?

Is your DNS server configured correctly on the server? A timeout is odd here. Something is blocking your DNS lookup or the connection to the other server. Like I said, we lookup the MX records of the remote server, then we try to connect to it to send the mail. People get all kinds of errors all the time, but the errors are generally informative and indicate mail rejected, mailbox not found, dns lookup failed, etc. You can call into our support line if you need some help live.

In the above example we weren't connecting through exchange, we were trying to connect to the remote domain SMTP server. How is yours configured?