550 5.7.1 NDR's as mail volume from IIS Virtual SMTP server to Exchange 2010 increases

Question

We have a virtual win 2008 server that has a Virtual SMTP server running via IIS. A separate application on this server drops emails in the pickup directory to forward to our Exchange 2010 environment and this works fine. The odd issue is that as the volume
of messages being dropped in the pickup directory increases to over around 500 per minute we see a huge increase of bounced emails ending up in badmail directory on this server. The NDR we receive from our exchange environment states the following
550 5.7.1 Anonymous clients does not have permissions to send as this sender
As soon as we throttle this application the issue stops. And the same emails that bounced can be resubmitted with no issues
This particular virtual SMTP instance sends to only a handful of mailboxes in our organization, but it does send a lot of messages
We currently have a receive connector for all internal relay servers, and this server is called out in the accepted IP range and the message rate is sent to unlimited. Here are the edited version of the details of one of the internal relay receive connectors
on one of our hub transport servers. Is there something we have setup on the these connectors that might be causing this?
RunspaceId                             
: 1e06e317-da65-4916-9b2c-e1253b4b550b
AuthMechanism                           : None
Banner                                  :
BinaryMimeEnabled                      
: True
Bindings              
                 : {0.0.0.0:25}
ChunkingEnabled                     
   : True
DefaultDomain                          
DeliveryStatusNotificationEnabled      
: True
EightBitMimeEnabled                    
: True
BareLinefeedRejectionEnabled           
: False
DomainSecureEnabled                    
: False
EnhancedStatusCodesEnabled             
: True
LongAddressesEnabled                   
: False
OrarEnabled                        
    : False
SuppressXAnonymousTls                   : False
AdvertiseClientSettings                
: False
Fqdn                   
                : HT02.corp.com
Comment                                 :
Enabled                                 : True
ConnectionTimeout                       : 00:10:00
ConnectionInactivityTimeout            
: 00:05:00
MessageRateLimit                        : unlimited
MessageRateSource                       : IPAddress
MaxInboundConnection                   
: 5000
MaxInboundConnectionPerSource          
: 100
MaxInboundConnectionPercentagePerSource : 100
MaxHeaderSize                 
         : 64 KB (65,536 bytes)
MaxHopCount                             : 60
MaxLocalHopCount                       
: 8
MaxLogonFailures                        : 3
MaxMessageSize                    
     : 30 MB (31,457,280 bytes)
MaxProtocolErrors           
           : 5
MaxRecipientsPerMessage                
: 200
PermissionGroups                        : AnonymousUsers
PipeliningEnabled                      
: True
ProtocolLoggingLevel                   
: Verbose
RemoteIPRanges                          : REDACTED
RequireEHLODomain                      
: False
RequireTLS                              : False
EnableAuthGSSAPI                
       : False
ExtendedProtectionPolicy               
: None
LiveCredentialEnabled                  
: False
TlsDomainCapabilities                  
Server                                  : HT02
SizeEnabled                     
       : EnabledWithoutValue
TarpitInterval                          : 00:00:05
MaxAcknowledgementDelay                
: 00:00:30
AdminDisplayName             
ExchangeVersion          
              : 0.1 (8.0.535.0)
Name                    
               : Internal Relay
DistinguishedName                       : REDACTED
Identity                     
          : HT02\Internal Relay
Guid                                   
: a1f5af2e-6d53-4cb9-80b6-d19aab6879b4
ObjectCategory                 
        : REDACTED
ObjectClass                             : {top,msExchSmtpReceiveConnector}
WhenChanged                    
        : 6/20/2014 11:12:17 AM
WhenCreated                    
        : 2/18/2011 10:15:58 AM
WhenChangedUTC                  
       : 6/20/2014 3:12:17 PM
WhenCreatedUTC                
         : 2/18/2011 3:15:58 PM
OrganizationId                         
OriginatingServer                       : dc04.corp.com
IsValid                                
: True

Answer 1

Just to clarify, this is not a pickup directory on an Exchange server but on a Windows 2008 server running an SMTP Virtual server in IIS 6.0. The problem happens only when the message volume from this server to Exchange increases to over ~500 messages a
minute. When that happens the messages get bounced from Exchange with the following info in the NDR
550 5.7.1 Anonymous clients does not have permissions to send as this sender
If we resubmit all the bounce messages at a lower volume per minute we do not see the issue. I'm still working on replicating the issue now that we have logging turned up on the receive connectors.
In addition some messages are being bounced with the following NDR message
554 5.6.0 Invalid message content
These messages are always between 65-70KB and have around 200 recipients
In the Exchange receive logs for the receive connector for these messages we see the following message (with different sizing)
A parsing error has occurred:MIME content error:
Singletext value size
(32781)exceeded allowed maximum
(32768).
The messages dropped in this pick-up  directory can be anywhere from 1KB to 10MB, so it's not that it's viewing each batch as a single email but something different with this particular email. I've tried searching for where to increase this MIME value
but can't find out where it is stored in Exchange.