Incoming Email Settings are misleading
Email address of each document library depends on the incoming email settings you have configured in central admin, especially the email domain the farm will use. If you have configured AD integration, whenever you have enabled a incoming email feature for a list or document library, it will create a contact entry in AD, which would place an entry in exchange contact list. After the address list gets updated, the email gets listed in the address book in Outlook, allowing users to email content into the document library without requiring them to remember the email address.
I don't know about you, but I live and breathe in my Outlook (which is why Dynamics CRM has an edge over the rest of the CRM product isn't it?). I'm receiving so much information in my outlook that I need some good way to start to capture these information. Plus the fact that my harddisk is running out of space. Hence I thought of using incoming email feature to allow me to post content into my SharePoint knowledge database behind my firewall, not accessible via the internet because Starhub blocks port 80, and port 443 is already used by another application.
The following values are ficticious. My internal domain is litware.intranet. Internet domain is litware.internet. Central administration allows me to configure two values for the domain, as shown in the screenshot below.

As the label put it, the first settings is SMTP mail server for incoming email. I interpret it as the FQDN for which the virtual smtp server is set up at. Hence I gave the internal fqdn, which is sharepoint.litware.intranet. Then, there is a label that says email server display address, and the format of the text box implies the email domain which will be shown to the users. So I set that to sharepoint.litware.internet. Then it is time to configure Exchange to route email from sharepoint.litware.internet. Sharepoint.litware.intranet is taken care of with a MX record in the intranet dns. Combined knowledge has a white paper on how to configure Exchange to route the email here. I used the Exchange 2007 paper, but the security settings mentioned wasn't enough for SharePoint to write to the OU. After some tweaking, the whole set up finally works, with email routed to SharePoint and my custom email handler works perfectly, or so I thought.
Looking at the contact list in Exchange, I realised that all the email domain is wrong! Instead of using internet domain, it is using the intranet domain. With Steve Smith and Kevin Laahs's help, I began playing with the settings by first changing the SMTP mail server setting to the external domain. Email routing wasn't affected at all, but new email contact for new email enabled document is showing the correct email address. Then I realise that SharePoint doesn't talk to the smtp server, since the external domain is not resolvable internally, and internet will resolve to my exchange. It just monitors the drop folder. Misleading huh? At least to me, it is...
Having solved the problem, my emailed enabled knowledge library is working, enabling me to file documents and tag them at the same time. I've done a poll on how people are using incoming email, but response wasn't very positive. So the next few posts, I will probably be writing about how my solution works, but I won't be sharing the source code. If you are interested, you can contact me to bounce ideas, or I can get my company to be involved in a consultancy exercise. (I don't earn extra, since I work for the company, not own it)
P.S. Do you know that MSN Space allows you to use email to upload images and post blog posts?