I figured out why!
I am a tech for http://www.volknet.com - a web hosting company.
Recently we installed phpsuexec (which helps to secure a lot of things in apache) and then we started to get these errors described.
with phpsuexec you cannot have a file chmodded to 777 and all .htaccess files that contain certain things must be renamed to php.ini
More and more hosts are using this phpsuexec to keep spammers from spamming. Since we installed it, we can control how much email spammers send out and block them before they even get 1000 emails out. (rather then 20000+)
Either way, I've been working on a solution for a while but still no luck. :) Cya.