When you configure SmarterMail, the first thing you have to do is configure a domain. If you are only using it as an incoming gateway, this is a distraction and a point of confusion. You apparently configured your real domain name. You need to start over and configure a nonsense domain name such as "nothing.local". Once this is done, you can access the incoming gateway option, where you specify the domains that it will accept for forwarding.
Alternatively, you can configure your SmarterMail domain in external mode, which means that it delivers locally if the user is local, and forwards to Exchange otherwise. This might avoid rebuilding what you have in place now, so it would be the quickest fix.
If you are going to use Declude with your incoming gateway, you need to start with version 16, then follow the special steps available from MailsBestFriend.com for upgrading.
If you are running v17 or later, there is an option to perform recipient verification. When this is enabled, SmarterMail will do callout verification, where it performs a test connection before attempting the real delivery. (Version 16 does not have this feature, so it will generate non-delivery reports.)
Recipient Verification may not detect all possible delivery failures, although this is much improved in the new MAPI-enabled builds. I recommend having a rule in your outbound gateway to quarantine messages starting with "Failed: " or "Undeliverable:", as these are the formats generated by SmarterMail and Exchange for non-delivery reports. (Quarantine is better than blocking because quarantine ensures that the NDR will not generate and NDR.) NDRs should not be sent for incoming mail because they can be sent to a spoofed destination, turning you into part of the spam problem.