Originally posted here by Tiger Shark
Youu need to allow his remote IP address to "relay" mail. There is a setting, (sorry, I can't guide you to it, refer to help), that allows you to put remote IP's in to allow them to send email through your server... Put only his address in there or you become a spammers dream.
Better yet, don't do it by IP. Instead setup the Exchange SMTP virtual server to allow relaying from authenticated hosts. Tell him to setup his IMAP client to do authentication on outbound SMTP. This way he has to actually log into your exchange server using his mailbox login/password to send SMTP.

This should cover the different possible settings for you- http://www.microsoft.com/technet/pro....mspx?mfr=true