It basically means that there is a problem with the email software installed on the server.
Enable SMTP in Admin Panel --> General Admin --> Configuration, use as SMTP server localhost, leave username and password empty and see if it works.
If it still doesn't work, try as SMTP server the SMTP server of your hoster or your ISP as well as the respective username (if necessary) and your SMTP password (only possible, if the SMTP server supports authentication).
If this is a personal server, you'll probably want to install and SMTP server. Please see Google
for some links.
On some servers, such as CoolFreePages, no email options are avalaible. In this case, you'll need to modify emailer.php to not send emails and not error out. It just so happens, that I've made such a file http://www.phpbb.com/phpBB/viewtopic.ph ... 253#989253