I'm getting the following smtp error whenever Vanilla tries to send an email:
SMTP server response: 501 5.5.4 Invalid Address in

I believe this is the same issue as reported on Drupal here: http://drupal.org/node/92041

On Windows, the mail() function doesn't accept addresses like "name <email@host.com>" . We've hacked a fix, but wanted to report it so that it can be fixed in the next release.

in library\Framework\Framework.Class.Email.php:
We changed line 120 as follows, to output an address formatted like "email@host.com"
//$Header .= "From: ".$this->FromName." <".$this->FromEmail.">\r\n";
$Header .= "From: ".$this->FromEmail."\r\n";

Very strange! I believe we're on Windows Server 2003 SP1 w/ IIS 6.0 and PHP 5.2.0.