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Do you get the same result if you switch to a pick-up directory? Something like:
<system.net>
<mailSettings>
<smtpdeliveryMethod="SpecifiedPickupDirectory"from="no-reply@mydomain.com">
<specifiedPickupDirectorypickupDirectoryLocation="C:\Development\MyWebApp\Mail" />
</smtp>
</mailSettings>
</system.net>
There is also a good dummy SMTP server available at codeplex (http://smtp4dev.codeplex.com/) that is quite useful for debugging some mail issues.
Did you activate an EPiServerMail account here? http://world.episerver.com/Download/Items/EPiServer-Mail/Activating-EPiServer-Mail/
My Site developed using Episerver 7 CMS . Now I need to activate Epimail. I have configured EpiMail in EpiMail.config and When i send email no error found. I'm getting message after click on "Send Now" that is "Your e-mail has now been sent to the server and will be delivered shortly.". but i'm not getting email. Can anyone tell me what would the problem.