Another small point: you're not sending email in C#. You're sending email in .NET, using a program you wrote in the C# programming language. Presumably the exact same problem would have occurred if you'd written the code in VB.NET.
It means that the SMTP server you are using doesn't allow relaying - this could be because you're not authenticating, or not sending to an email address that is local. There is an option (in IIS SMTP anyway) to allow relaying without authentication