Can't send messages to external contacts

I have a strange problem here. 

I have SBS 2000 with Exchange 2000 installed on my system. 

I have created a Universal Distribution group and a contact with external
e-mail address (later on more contacts will be added to this group). I
have added few internal users and new contact to this group. Now, I can
send e-mails from my internal account to that contact directly. But if I
send e-mail to Distribution Group then e-mails are only being forwarded to
internal users. It is not being forwarded to the contact with external
e-mail address.

Any ideas how can I solve this problem?

Thanks in advance.

Sushil Bhalla

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