Kris,
Usually, all you need to setup is this :-
In server manager, e-mail retrieval :
You must specify you e-mail retrieval method and relevant isp mail server settings and username / password
In your situation, Delegate mail server should be BLANK
As to whether you select standard or multidrop, that depends on what your arrangement is with your ISP with regards to your domain mail. If you have asked the ISP to drop all e-mails addressed to your domain into a single mailbox for collection, then you will need to set SME as multidrop.
In server manager, Other e-mail settings:
Internet provider's SMTP server: enter your isp's SMTP server here (eg. smtp.yourisp.com)
If you prefer, you can leave the SMTP entry blank, in which case, your outgoing mails will be handled by the SME server and does not rely on your ISP's mail server.
Not all ISPs denies you from sending e-mail when your reply address is not on their domain. Example : if I setup my reply address as someone@hotmail.com in Outlook Express, I can still send mail through my ISP. I do not have to use the address someone@myisp.com. All the ISP cares about is that the outgoing mail connection came from one of their physical connections and not relayed via another ISP (ie. I cannot dial into ISP1 and set my Oulook outgoing mailserver as the SMTP server of ISP2). If I dial into ISP1, my outgoing mail server MUST be SMTP server of ISP1 -- all the ISPs I've worked with so far DON'T CARE what you set your reply identity to be and so you can have your own domain name in Outlook (ie. someone@yourdomain.com and not necessarily someone@yourISP.com).
Hope this helps.
Kelvin