I ran into a strange issue on a SBS 2008 box with relation to mail flow. I was noticing that mail being sent to outside companies is stuck in the Queue. Not all mail, but a lot of it. When looking at the “Last Error” in the Queue Viewer, I notice most of those connections say “DNS query failed” . I opened up the DNS manager and looked at the cached lookups of some of these domains, and I notice that the domain folder is there but is empty inside. I then cleared the cache of DNS, and then told Exchange to retry delivery. Mail was then delivered and then after about 30 minutes I see the issue start happening again. I did not have DNS set to forward to any other DNS servers, and it is just using root hints.
After a bit of troubleshooting, I came across this article: Windows Server 2008 DNS Servers may fail to resolve queries for some top-level domains at http://support.microsoft.com/kb/968372 .
I did the registry change, and it has now been 72 hours and the problem has gone away!