Smtp going to wrong server

I am trying to change our email server to go from our internal exchange
server to a hosted one.

On our Mars machine it is using its own SMTP server. We still have our DNS
server and exchange is still running on that machine but there is no MX
record on these machines and our domain as Network Solutions has an MX
record pointing at the Hosted site.

The problem is with our internal address coming from our Mars machine. We
have our smtp server set as local host in our code and it works fine for
addresses outside of our network. But if Mars sends an email message to
someone internal, it seems to go to our internal exchange server and to our
old mailboxes on that server.

What would cause Mars to send the email to our internal Exchange server?

The DNS server for mars is Earth and somehow it seems that even though there
is no MX record in our DNS - it is passing it to Exchange that is running on
that machine. Does it somehow see Exchange running on that machine (even
though there is no MX record there) and give the mail to it?

Thanks,

Tom