Whoa.
Exchange 2007 does not require the SMTP server. Take that out, it will only make troubleshooting even harder. For Exchange 2007, the Exchange Hub transport role handles SMTP, it does not require a separately installed SMTP server.
Once you have removed SMTP Server, try sending outbound mail. If it is not going out, open up the Queue Viewer, and you should find some clues as to what is stopping mail from leaving the Exchange server. It's most likely a mis-configured Send Connector, if I had to guess.