Yes Exchange 2007 has been installed and even before 2007 was installed we have been able to send email using 2003. I've put the outgoing email settings to point to 2003 and it works fine. SharePoint sends email with 2003 exchange. With 2007 it fails but it does send email when ANONYMOUS USERS is enabled.
As for the application log it only say:
Cannot complete this action.
Source: Windows SharePoint Server
Category: Email