On a machine running XP Pro on our office (peer to peer) network a brand new installation of Outlook has suddenly stopped sending internet emails, giving the above error message. It still receives external emails and sends/receives internal mail.
If the "pst" file is opened on another machine, it functions correctly and emails can be sent.
Have already worked throught the MS Knowledgebase article 197417 but with no joy. (Have also deleted all services/profiles in Outlook and re-created).