Lessons Learned:

After many, many hours of trouble shooting why DNN reported: Could not access 'CDO.Message' object whenever Test was clicked in the Host Setting, I discovered that the error was ultimately traceable to our new network policy which requires McAfee VirusScan to be installed on all boxes.  The culprit was the Access Protection item: "Prevent mass mailing worms from sending email". Since I could not disble the item, I found that I could exclude the Windows 2003 IIS application pool worker process from being blocked by adding W3WP.EXE  to the exclusion list.... Problem solved. 

Hope this entry saves someone from banging their heads on the same wall that I did.