Thanks for your help Smeghead.
I tried the queue-repair, but it wasn't the problem. After looking more closely at the qmail logs, this was the problem and solution:
http://forums.contribs.org/index.php?topic=22434.0--------
I was altering the permissions of the home drives on the system and didn't realize that would have caused the problem.
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After viewing the qmail logs, there was some weird messages and I'm not sure what they mean. I don't think there's any wrong with the mail server now (ie. All users seem to be able to send/receive internally now)
Here's part of the log file:
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@40000000414cac1015a2bc04 status: local 2/10 remote 0/20
@40000000414cac1015a2bfec delivery 639: success: forward:_qp_6005/did_0+0+1/
@40000000414cac1015a2c3d4 status: local 1/10 remote 0/20
@40000000414cac1015a2c7bc end msg 3653718
@40000000414cac1017852fd4 delivery 640: success: did_1+0+0/
@40000000414cac1017853b8c status: local 0/10 remote 0/20
@40000000414cac1017853f74 end msg 3653719
@40000000414cac6916f7dc24 warning: trouble opening local/8/3653719; will try again later
@40000000414cace516f7c0cc warning: trouble opening local/8/3653719; will try again later
@40000000414cad6116f7c0cc warning: trouble opening local/8/3653719; will try again later
@40000000414caddd16f7ebc4 warning: trouble opening local/8/3653719; will try again later
@40000000414cae5916f7d83c warning: trouble opening local/8/3653719; will try again later
@40000000414caed516f7cc84 warning: trouble opening local/8/3653719; will try again later
@40000000414caf5116f7c0cc warning: trouble opening local/8/3653719; will try again later
@40000000414cafcd16f7e3f4 warning: trouble opening local/8/3653719; will try again later
@40000000414cb04916f7e00c warning: trouble opening local/8/3653719; will try again later
@40000000414cb0c516f7bce4 warning: trouble opening local/8/3653719; will try again later
@40000000414cb14116f7c4b4 warning: trouble opening local/8/3653719; will try again later
@40000000414cb1bd16f7e00c warning: trouble opening local/8/3653719; will try again later
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Your help is greatly appreciated!
flee