If I recall correctly, that's what it means.
Hmm, recursion? I could've done better, methinks...
Your problem could be any number of things. Are you sure there's an MTA running on the localhost? Is PHP running in safe mode (if so, [man]mail/man won't work!)? What about permissions/user rights, over-restrictive anti-spam/relaying policies (not that those are always bad), firewall configuration . . . it goes on and on.
If this is your box, you're got some definite seat work to do; if it's a "hosted" server, it dial-n-hold time . . . 🙁
[edit]Incidentally, Windows doesn't come with SMTP service by default. They want you to buy Exchange 😉[/edit]