A plugin to set up the email sent to new users when they register.
Are you sure that that address exists on your host? If you use MX records, you have to set up the email address on your host as well for it to work correctly.
Make sure they are in the format %variable% with no spaces between the % and the variable.
The best thing to do is search in the WordPress Forum, since there are countless different reasons and solutions, but the problem is likely with your server setup.
You are using PHP 4 and the plugin uses functions introduced in PHP 5. Please either upgrade to PHP 5, or download the alternative PHP 4 Branch of this plugin from here.
That depends on what that function is, and whether I'm free to do it/able to do it. It will also depend on whether the custom version will be paid work. Email me at alex at epicalex dot com for more on this.