The issue has been resolved. I spoke with my hosting provider and they educated me on how gray listing works. The following is an explination on how it works:
1. Let say tim@tim.com is located from our smartermail server.
2. The sender tim@hotmail.com sent the email to tim@tim.com.
3. Our smartermail will checking the From and To address.
4. If this is the first time for tim@hotmail.com sending to tim@tim.com
5. Our smartermail will put this pattern (From address + To address) in it’s greylist
6. Then, our smartermail will reject this SMTP session for 5 minutes.
7. The sender SMTP server will receive the message like:
1. 451 Greylisted, please try again in 360 seconds (our default setting)
8. After 5 minutes later, if the sender SMTP server retry to send the email again.
9. Our smartermail will accept this SMTP connection and further mail from xxx to xxx will be accepted for 36 days (our default setting) without waiting or rejecting.
10. On the other hand, if the sender SMTP server didn’t retry to send the email within 360 minute, the waiting period will be reset.
The net result is when setting up email within DNN for the first time send the email the first time and look at the Event Viewer. wait the specified time and then send the email again. From that point forward the email configuration will no longer be Gray listed...