Go to the mailroot sub directory in your inetpub directory. check out what's in the folders under mailroot. May get some clues. Also check your error logs.
Also check your services and make sure iis and smtp are running. localhost should work, so I'd suspect a congifuration problem.
To test if smtp is running properly...
Copy the following 4 lines into a .txt file:
From: emailaddress@someplace.com
To: emailaddress@someplace.com
Subject: testing
This is the test message body.
Change the email addresses to something you can check.
Copy the text file (not a shortcut) to the smtp pickup directory. On my XP machine, it's C:\Inetpub\mailroot\Pickup
Within a few seconds it should disappear from the directory and be mailed to the addresses.
Edited by dpyers