SMTP adapter enables sending messages between BizTalk Server 2004 and an SMTP gateway by using Simple Mail Transfer Protocol (SMTP).
Steps to configure SMTP adapter:
Step 1
Go to the property page of BizTalk SMTP Adapter from "BizTalk Administration Console". (As shown in the below screen shot) 
Step 2 -
- Provide value for "SMTP server name" i.e. Server Name / IP running SMTP service. Server name could be MS Exchange or any other mail server that supports SMTP.
- "From e-mail address" is the email address that appears as sender in sent emails.
- You also have 3 ways of user authentication.
Couple of things to remember:
- Restart the BTS Host instance. This action is required everytime you do any change to the SMTP adapter.
- Port 25 should be enable on the SMTP server, otherwise you will get error like "Not able to contact SMTP server".
- Be aware: Even though SMTP service is in start mode, by default antivirus softwares blocks Port 25