Thanks jgeoff!
I did find raw line feeds in some of the language text. I also found raw line feeds in the ubbthreads.inc.php where it adds a signiture to every email. I commented out the signature and am still having the same problem, so I will keep looking.
I set the IIS Default SMTP Service log file options to show more detial and have confirmed that the destination email server is still rejecting email due to \n.
I'll post an update if I find a solution.