Ahhh... seen this one before ... the mail server is not allowing you to send on mail, but you may be able to receive mail giving you the "not a gateway" error - you need to check with your ISP - we had Unix mail server at office that gave me the same error until I added my IP to it.
4 things you need to send and recieve email in Outlook. The POP3 server name, the SMTP server name, the username for the account and the password for that account. According to the error you showed it is your outbound mail that is having the problem. I assume you can recieve mail, if this is the case then when you are trying to send email is the only issue. If so it can be 1 of 2 reasons. Either you have the incorrect information in for your SMTP server (also do not check "My server requires secure password authentication' or 'My server requires authentication') and / or you are trying to do relaying. Relaying is when you are connected to an IP not allowed to send mail thru the email server you have specified in you account settings.
Ep, glad to see you come back and tidy up...did want to ask a one day favor, I want to enhance my resume , was hoping you could make me administrator for a day, if so, take me right off since I won't be here to do anything, and don't know the slightest about the board, but it would be nice putting "served administrator osnn", if can do, THANKS