Non existant account can send mail?

[dwill]

I just discovered an interesting issue.

we have a rarely used PC that drives a piece of equipment and has Outlook 97 configured to use POP / Internet mail. All of the mail server settings are correct for our domain, however this machine does not have an account on the mail server.
We'll say it's invalid@domain.net

When outlook launches, the login dialog appears with credentials that don't exist on the mail server. Canceling the dialog brings you into outlook.
E-mail can be composed, and when exiting outlook it tries to send/receive. Once again the user/pass dialog is presented and canceling out shuts down outlook, but the mail sent from this machine with a non existant account is delivered! Even to external addresses.

Sending an e-mail from any other machine to the invalid address results in a bounce that the account does not exist.

invalid@domain.net is not an alias, distributuion list, or account on the server. I'm thinking this is the first time this machine has been used to send mail since we installed Zimbra 2.5 years ago so imagine my surprise when it worked without an account. Does Outlook 97 have it's own smtp functionality?

Anyone got any ideas?