Is the IIS SMTP Server good enough for a production server?

IIS SMTP is good enough for high loads too.

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I would definitely go with the hMailServer option. We've used IIS SMTP in the past, but when there's a problem, it is a real pain to troubleshoot. hMailServer has much better logging and finer control over various SMTP settings.

You should see what the response is without using the pickup folder...we use hMailServer directly for our apps and it seems to work out OK. As you mentioned, you can do smart host relaying as well, but in my experience it is better to have less steps to troubleshoot.

Well - we used it in our production environment - but I have to caveat the solution:

1) We used it locally so that the queueing would never go down, we had it deliver to a smarthost (we used Postfix). The local queue was just there to accept the messages and send them on. The performance of IIS SMTP deliveing to multiple domains was horrible with volume.

2) If you drop directly to a DROP folder, then your app is tied to that solution. If you deliver with CDO (which should be configured to use SMTP, not just DROP), then you have a problem with high-bit characters in email addresses. This caused us to eventually deliver directly to our Postfix boxes, despite the drawbacks of not using a machine-local queue.

3) Inbound messages went through a third-party spam filter. We found DataEnter's XWall to be a great price/performance fit. Not exactly intuitive, but good performance and a lot of options for configurations. If you use it, I recommend getting the ESET add-on from Ceratec to give you some extra features missing from the core product.

BTW: You could use XWall to deliver outbound - we did this for a few apps and it worked pretty well. Postfix will handle a big load for free, but means managing another app and OS (Linux)...