Using Mozilla Mail 1.5 RC2 (Mozilla/5.0 (Windows; U; Win98; en-US; rv:1.5) Gecko/20030925) with Win98SE I had the same problem.

What I did to fix it was open avast4.ini & change UseDefaultSmtp=0 to UseDefaultSmtp=1. Then I terminated & restarted ashmaisv. I was then able send mail.