Glad you got it working. This is pretty common for most servers nowadays to prevent spoofing. I generally send the email from for example noreply@mydomain.com and then just include the email address of the actual sender within the body of the email. It just means that when the email arrives you can't hit Reply, you need to copy & paste the sender's email address into the To field manually. As you say, as long as the email comes from an address that uses the domain of the hosted website (it doesn't even have to be a functioning email address), there shouldn't be any issues.