If we configure the SMTP proxy in the RF660, does it store the incoming mail or only distribute it?

The incoming mail is temporarily stored within Queues and the forwarder will send the message immediately after it's receipt and scanning(if applicable). There is no permanent storage of messages that are cleared for transfer to your EMail Server. Messages that are stopped due to containing a Virus or SPAM Filtered content will remain upon the server and you will be notified of this.