When Outlook receives a 550 message from the mailserver it's sending to at the MAIL FROM stage, it just gives up immediately and reports the error. But if it gets a 550 after issuing RCPT TO, it goes through all the other local accounts it can find and tries to send from them instead.
Even if that were a good idea, which it isn't, it's totally back-to-front. The obvious time to try another account would be a rejected MAIL FROM, not a rejected RCPT TO.
Is there any way of stopping this behaviour?