Unable to get incoming e-mail working.

I am having several problems configuring incoming e-mail.  I have consulted Steve Smith's paper from Combined Knowledge on the topic (www.combined-knowledge.com/Downloads%202007.htm), but am still having problems.  I think they may be related so I am including them in a single post.

I am running MOSS 2007 SP1 (slipstreamed installation) with two WFE, one APP, and one DB server.  Service accounts are setup for least privilege.  The WFE servers have the SMTP service installed.  The services (Windows SharePoint Services Incoming E-Mail) are running on each WFE, as indicated from the Services on Server page in CA.

Problem #1:

When I " Enable sites on this server to receive e-mail " in automatic mode I immediately get two errors in the APP server Application event log once every minute:
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Event ID: 6872
A critical error occurred while processing the incoming e-mail drop folder . The error was: Value cannot be null.
Parameter name: path.

and

Event ID: 6398
The Execute method of job definition Microsoft.SharePoint.Administration.SPIncomingEmailJobDefinition (ID b8197cdb-92a2-4554-b3a4-46a89887878a) threw an exception. More information is included below.

Value cannot be null.
Parameter name: path
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I switched to advanced mode and entered the drop folder path "c:\inetpub\mailroot\drop" and the error continues.

I checked the permissions of the drop folders (there are two, one on each server since there are two WFEs that are load balanced) WSS_ADMIN_WPG and WSS_WPG had their permissions set.  I granted the CA service account full control over the drop folder, the errors continue.


Problem #2:
With incoming e-mail enabled (and generating the error above) I attempt to e-mail enable a document library.  After submitting the setting I get a non-descript error:
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Error
Error in the application.
Troubleshoot issues with Windows SharePoint Services.
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I suspect this error is because an entry cannot be made into the AD OU designated to hold


Problem #3:
As a test I sent an e-mail to the MOSS address, @sp.company.com (name changed to obscure my employer).  The e-mail bounced back and a warning was logged on the WFE server.

The System warning:
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Event ID: 4000
Message delivery to the remote domain 'sp.company.com' failed for the following reason: Unable to deliver the message because the destination address was misconfigured as a mail loop.

For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.
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The bounced back message:
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Delivery has failed to these recipients or distribution lists:

thisisatest@sp.company.com
The recipient's e-mail system can't process this message at this time. Microsoft Exchange will not try to redeliver this message for you. Please try resending this message later, or provide the following diagnostic text to your system administrator.
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I'm still troubleshooting and will post any updates to the thread