Now, if you're like me, your environment is not a dedicated SharePoint server. Amongst the myriad of applications that are running, my server has been configured as a SMTP and POP3 server, which will cause conflict when it comes to enabling your SharePoint sites to receive email. The conflict occurs when the Windows SharePoint Services Timer service attempts to query the \mailroot\drop folder. There will never be an email there because the POP3 service grabs the .eml files as soon as they arrive. Attempting to copy these files back into the \mailroot\drop directory from their respective mailbox folders OR pointing your incoming email settings to one of the mailboxes instead of the \mailroot\drop folder, results in the following application event error to be written to your event log:
"A critical error occurred while processing the incoming e-mail file E:\Inetpub\mailroot\drop\P3_xxxxxxxxxxxxx. The error was: Bad senders or recipients.."
The reason for this is that the Document Library Email domain and the POP3 domain are the same, causing a conflict over who gets control of the messages.
Solution: Uninstall the POP3 service and add the Document Library Email domain to the SMTP server's domains, OR create a new, differently named domain in the SMTP server's domain, and set that in your Incoming Email configurations.
More Information:
Plan Incoming e-mail (Office SharePoint Server)
Peter's World - MOSS 2007 WSS V3 Incoming Email with Exchange
Various Other Issues with Configuring Incoming Email