Fixed it. I had to call Yahoo smallbusiness tech support...word of caution. The support is good, but the services are aweful...would not reccomend to host. In any case:
I used this information from http://angstrey.com/index.php/2009/07/20/contact-form-7s-failed-to-send-your-message-error/
1)Go to Contact Form 7’s settings (Tools -> Contact Form 7 (version 1.x)) or the new “Contact” menu (Contact Form 7 version 2.x)
2)From: field: Enter the same e-mail address shown in the “From:” line of your WP-Mail-SMTP settings. For example, let’s pretend I am using “firstname.lastname@example.org” in the “From:” line of my WP-Mail-SMTP settings. I must enter the same e-mail address in Contact Form 7′s counterpart. Contact Form 7 will have [your-name] “<[your-email]>”. This won’t work for you.
3)Very Important: Contact Form 7 will have a field called “Additional headers:”. Enter (literally) “Reply-To: [your-email]“, without the quotes. The [your-email] placeholder is the same field used inthe Contact Form 7′s form. Contact Form 7 will replace it with the e-mail the user supplies in the form. This header will allow you to reply to the sender directly without copying their e-mail address manually by you.
4)Click the Save button.
5)Open the Contact Form in your blog and you should finally see the sweet “Your message was sent successfully. Thanks.” green bordered text.
You will notice that the e-mail will take several minutes to arrive in your inbox. Take heart, it will arrive.
The “To:” field is the e-mail address where you would like to receive the results. The value I am using is my personal e-mail account. Also, make sure that you do include the person’s e-mail address in the form’s results so that you are able to have a copy of the person’s e-mail in hand.
Additionally, I had to download plugin wp-mail-smtp and do the following
1)From Email: “email@example.com” (without the quotes). This must be your Yahoo hosted e-mail account.
2)From Name: type in either your name or the name of your website. This will make the From line of the e-mail read as “From Name” <firstname.lastname@example.org>.
3)Mailer: Because yahoo uses PHP/PerlMail, I had to make sure in my yahoo hosting account that the PHP/Perl Mail Setup's default email was the same as the From email you just set. In the form, set this radio button to "...PHP mail() function…”
4)Ignore the rest as they are only there for SMTP based mail. However, if it would make you feel better, set Encription to “No encryption” and Authentication to “No: Do not use SMTP authentication”.
5)Click save changes
6)Test your email through the contact form itself. It may take a few minutes to show up in your hosted email, but it should!