So, here I am in 2012 with DNN 6.2 and GoDaddy hosting and email, and I am getting a similar error/problem. I would click the Test SMTP Settings button and it would work fine with server as "k2smtpout.secureserver.net" and "Anonymous" authentication, but if you changed a password or approved a registration, you would get an error related to email notification. Here's how I fixed it: In Admin - Site Settings - Security Settings section, the Administrator field was set to "Administrator Account". Well, in my site, I don't actually know which user account is the "Administrator Account". When my friend setup this site, he said the old "admin" account doesn't exist anymore, just the "host" account. I don't know if this is true or if that's the problem. So I changed the value of the Administrator field to another user account that was an "Admin" and their email address matched the email address that is specified in the Host Settings - Basic Settings - Host Details section - Host Email field. That made it work.