Hello anne,
Although I have never tried sending message with IIS , so i cannot say why this error message is coming.
But i would suggest you another way to make things work on your system. I have done it too..and it works fine.
I would suggest you to download QK SMTP Server(freely available on internet ) and install it on your computer. Then whenever you will be sending the mails your program would be using the QK SMTP server.
See if it works and let me know.
Regards,
azamat