I have tried a few solutions on the boards, haven't gotten anywhere with them, so here we go.

I can access my webserver from any external computer. I cannot access it local. If I type in the domain name I get a "The page cannot be displayed" message. I am almost 100% it has to do with my firewall script. Now, before I go insane, here is the script.

# Allow all internal systems out
iptables -t nat -A POSTROUTING -o ppp0 -j MASQUERADE

# Foward port 80 to webserver
iptables -t nat -A PREROUTING -p tcp --dport 110 -i ppp0 -j DNAT --to 192.168.2.40:80


I have other ports open, but none are important.

Any ideas?

Maybe i'm missing something...
A little reminder:
This is not exactly what it does. It does Masquerade. Allowing or denying is defined elsewhere. Take a look at that.
In this code i presume you want to receive web data addressed to port 110 and forward it to port 80... what if someone tries to make a pop request? I really don't know, but I guess your webserver might not like it. Why don't you just forward 80 to 80 ?

Other than these few ideas, a reason for your problem might be the fact that:
assuming your external net address is 202.202.x.x, if the DNS is external, it resolves the name mydomain.com as 202.202.x.x .
Now, this could be a problem if, performing a web request from the lan, your box doesn't resolve 202.202.x.x as 192.168.2.40... am i wrong? (could be...)
Normally, this is done automatically, so... assuming it works correctly, refering at your iptables rule:
You're DNATing only data coming from interface ppp0 but your request actually comes from the inside...
Try to modify this statement and let us know if it works!

Okay...

I have tried to modify that line, but let me explain all I have done (should have done first, sorry). I also want to make sure that I understand all this right.

First, port 110 was an oops. The line should have read...

iptables -t nat -A PREROUTING -p tcp --dport 80 -i ppp0 -j DNAT --to 192.168.2.40:80

All I did was copy a line out, and change the ports. Port 110 is for email.

Now, I have tried to change that line.

iptables -t nat -A PREROUTING -p tcp --dport 80 -i eth0 -j DNAT --to 192.168.2.40:80.

I am semi confused though. If I can ping mydomain.com, and I get my IP address, how come I cannot access it through http? That is still not making any sense.

Now that you changed that line, can you see the website, at least inside the lan?
By the way, for this specific command, you might forget about interfaces:
When you ask your firewall box for port 80, doesn't it always mean "always DNAT to 192.168.2.40", indipendently if you're inside or outside?
Let me know if it works... it's intriguing...

One problem is that I have a dynamic IP address. So setting the ip address with iptables isn't that easy. I can see the website fine if I am internal, I just have to call the internal IP (ie http://192.168.2.40). That works fine. When I call the domain http://www.domainname.com, I get the error.

In theory you are correct. But apparently, it does not work that way.