The cdonts.dll email component is made accessible to domains on the server when the IIS 4.0 SMTP service is enabled. To successfully enable the component to send mail to the SMTP service without permissions errors requires proper configuration of the server. Generally we recommend that questions of this nature be directed to Microsoft since these are Microsoft systems. We are posting below some information provided by a StoreFront user who struggled through the CDONTS permissions issue by trial and error. You might find her comments useful:
The root of the problem seems to be the NTLM authentication which is turned on by default on the SMTP service. Have the network admin switch NTLM off for the SMTP service.
We found out some additional information about the permissions problem with the SMTP service. We had three domains running dom-1, dom-2 and dom-3 and when we put my sample STMP page in dom-1 it worked fine, but when placed in the root of Dom-2 and Dom-3 we kept getting the same permssions error no matter what permissions we gave the directory or the service...
After a while of fiddling with it we saw that since we were installing this on a Production server, our network admin had configured Dom-2 and Dom-3 to run in their own protected application space under the Management Console. When we shut that off SMTP started working just fine. I researched further and found that checking that option somehow runs the application through Transaction server which has its own permissions stuff. I have not figured out exactly what you have to do in Transaction server to get it to work right, but shutting off the "run in protected memory" will fix the permissions problem if the other fixes don't work.
An additional discovery I made while trying to figure this out is how to run the SMTP service on the same physical machine as another e-mail server. When we originally installed the SMTP service on one of our servers we got a server error because there were two separate SMTP processes trying to run on the same machine. The fix for this is to switch the IP address for the SMTP service to one other than the root IP for the machine. This will enable the SMTP service to run concurrantly with another email or SMTP service. Just FYI in case some of your clients ask you about that one. Not everyone is going to have two separate servers to run this stuff on :) One note, switching the IP on the SMTP service has not affected its sending mail at all, as far as I can tell so far.
Some other helpful resources for resolving the permission denied error can be found at http://support.microsoft.com/support/kb/articles/Q228/4/65.ASP and http://support.microsoft.com/support/kb/articles/Q184/2/70.ASP
