I've gone about setting up email through outlook.com using my domain.
step1) visit domains.live.com and sign in with my hotmail account.
step2) visit my dyndns to update my txt and mx records to values suggested by domains.live.com.
step3) refresh domains.live.com to see if they can see I've added the records. Domains.live.com was aware of my updates, and allowed me to immediately create email accounts under my domain name (like: *** Email address is removed for privacy *** )
step4) sent email from the account at outlook.com and received it at another computer outside the outlook.com. 
step5) reply back from computer on the outside an recieve a bounce back indicating DNS hard error looking up the MX supplied by domains.live.com.  When performing an NSlookup, I do see the mx record supplied by MS for my domain.

Where do I go from here?