MTA = mail transfer agent, a server program which moves mail around, also doing queuing etc. You may be able to use the IIS built-in MTA, but it will require significant configuration.
It's extremely inflexible and keeps poor logs (i.e. does not log delivery AT ALL, not even optionally), but otherwise fine.
Alternatively use one of the large number of other MTAs out there.
You will need to configure PHP on win32 to deliver to localhost, where the MTA will pick it up and send it on.
The tricky bit will be configuring the smart host to use authentication (if that's what you need to do). I've never needed to do that before.
Mark