Is your local machine set up to receive SMTP requests on the external interface, and secondly is it setup to relay? The reason it cannot resolve your domain address is probably because your box is not responding to an SMTP request. You might want to try sending via the 127.0.0.1 address if your testing on the same box that the mail server is on.
Regarding Count Zero's mention of the HTTP submission method, that has been planned for some time, but it hasn't yet been implemented. However, it is coming very soon. Ask thinks he is very nearly ready to make the switch, which will then mean that the SMTP method will be depreciated as testers software gets upgraded to use the new submission method.