First thing you have to do is adding an smtp server to your config. Do this by going into software setup/windows setup. There you can find an entry that must be called something like internet or iis (sorry, i'm in front of a german windows so i can't tell you exactly how it is named in english). double click it and do a check at smtp-server. After getting some stuff from you winxp cd the smtp-server is installed. You can reach the configuration by executing mmc and adding the iis/smtp snap in. Nearly finished now but you have to enter a so called smart host. This is the server where your local server will sent emails to. There are some more things to select but i hope you will figure them out by yourself. If not, let me know.
Don't forget to get to enter your new smtp-server into you php configuration file!
If the build in smpt-server is too much for you or if you want to receive emails too try getting a copy of the kerio mailserver (kerio.com). This one supports in and outgoing emails, http access like outlook web access AND wab access via your mobile phone.
Hope that helps.
buzz