Hello,
Your client's e-smith server is a full-fledged SMTP server, so the best setup would be for you to provide DNS service but let them provide their own email service. You would need to publish an address record such as mail.theirdomain.com pointing to their e-smith server, and publish a primary MX record pointing to mail.theirdomain.com. (Even better if you can act as secondary MX, temporarily storing their email if their connection ever goes down, and resending it to the primary when the connection is restored.)
Alternatively, if you want to take over mail handling, you could direct all of their domain's mail to a single POP mailbox and configure their e-smith server for multi-drop (this is not as good as the first arrangement I described).
Or a third possibility is to ignore their mail server completely and host their domain entirely. (This is the least attractive solution.) In that case the best thing would be to ignore their e-smith server completely. Just set up the usual POP mailboxes etc. and have the client configure their email software as though the e-smith server were not even present.
I'm not certain what relaying you have tried to set up. If your client is running a stock e-smith system, there are no relaying limitations at all.
Hope this helps,
- Joe Morrison