You're using your ISP's mail server, and they appear to have SMTP authentication enabled.
PHP's internal mail() function can't handle SMTP authentication, so you might try finding a class (e.g. PHPMailer) that can do authentication, give it your e-mail login credentials, and try sending mail that way.
EDIT: Oops, didn't see the error message. So php isn't reading your php.ini file, obviously. Where is this php.ini file located, and where does PHP think the file is (hint: phpinfo())?
EDIT2: Note that the problem I mentioned above will still prevent you from sending mail using PHP's mail() function, but we should still resolve your .ini issue first.