a) You mail server is not allowing relaying for other domains (check mail server log if you have access). Your mail server needs to allow access to other domains other than your own (I assume you can send email mails to addresses featuring the website domain?)

The mail Server is with GoDaddy. I would not know where to begin to look at the server log with them. I have dome nothing specific to allow or disallow access to other domians. I have been able to send SMTP though a GoDaddy domain in a non-DNN environment.

b) You maybe running an earlier version of DNN whereby mails sent with the newsletter module get confirmed as sent, when in fact the oppersite is true.

I am on version 04.09.00

1) Try leaving the mail server field blank with anonymous authentication and see if this works.
Did this. When running test at host setting, received an error. Since this has worked before while the newletter didn’t , I went ahead and tried to send a newsletter and received “The SMTP host was not specified.”

2) Try this if using a dedicated server:
http://help.godaddy.com/topic/120/article/122

According to the article, I set SMTP In Host Settings to the following, each with the following results
k2smtpout.secureserver.net – timeout
k2smtpout.secureserver.net:3535 – timeout
k2smtpout.secureserver.net:587 – timeout
k2smtpout.secureserver.net:25 – there has been an error trying to send the test email. The error is: Failure sending mail. Unable to read data from the transport connection: net_io_connectionclosed.

3) Contact GoDaddy and ask why mail relaying is denied from your web server/mailbox.
I have contacted GoDaddy. In typical GoDaddy fashion and aptitude, they sent me instructions on how to set up an Outlook Email Account. I have sent this issue back to them, but I am not hopeful that Godaddy will reveal anything here.

4) Leave GoDaddy and find a better hosting provider :). Under Consideration.
I cannot sit here and say it is a GoDaddy issue, emails from the “test” in the host settings go through but emails from setting up users and the newsletter do not.
FYI SMTP relaying is turned on at GoDaddy on the email account I am using.
 

My problem has been solved, exactly what solved it is still a mystery here. Suddenly email started coming through. I believe it was on the godaddy end. The one thing I did over there was "resave" the account allowing smtp relays of 250 per day. That was the default setting though. I did have a ticket open with godaddy and maybe they did soemthing else.