Two problems existed here:
1. The wordpress devs have hard coded the default admin email account to be 'firstname.lastname@example.org' in two separate locations in pluggable.php. This seems to have been known except by me.
2. The second (and worse issue IMO) is that the phpmailer app was choosing to use the standard php mail() function instead of the smtp or other options and this function uses the user name of the web server process and the server's host name as the domain name for the senders email address so you will get something like email@example.com.
To fix both these I simply changed the hard coded default email address to what I wanted in pluggable.php and also changed the 'sendmail_path' php.ini attribute to include the '-f user@domain' option to force the sender email I wanted to use. This solution of course does not scale because all php apps I run in any web site on my server will now be send email from this email address (not good).
I can't believe this is the defacto standard for sending email using php web apps.