well i have the same problem. just that i m getting a different error.
Error while performing operation: RCPT TO <xxxxxx@xxxxxx.com> failed: Syntax error, command unrecognized
where <> has the e-mail address i m sending the mail to. kmail works fine so it shd not be a problem with hosts or any other file but anyways i have checked that thing.

evoultion 1.4 works now. enjoy it

oh man you don't know happy i am and yes i am enjoying it :D

so was I and still am. but don't honor me, this solution is quoted and was e-mailed to me from a guy (who knows damn much and helped me out a couple of times) from the users@lists.ximian.com.

well so then tell him that he helped another guy too :D

just did it of course

Speedfreak, thanks for the tip. I just put Evolution on Slack 9.1 and found this thread through Google. My hosts file had two entries for 127.0.0.1 (and a note to never, ever name 127.0.0.1). I removed the named entry and smtp mail now works.