My SMTP mail server requires that email be sent with TLS encryption and on port 587. This makes it problematic for Team Foundation Server (TFS) to send emails directly. To work around the problem, I installed the Windows 2008 SMTP Server service and configured it for relaying to my real SMTP mail server.
Install SMTP Server
To begin, launch Server Manager and add the SMTP Server feature.
This includes a dialog to add some additional items.