Before going to configuration of Email server one have to install it on the server. To check the installation steps one can refer below mentioned article for email server installation on windows 2003 server:
Email server installation Guide
After the installation one can perform below mentioned steps to configure the email server:
1) Click Start -> run and type p3server.msc
It will open up the POP3 Service from where one can configure and manage the POP3 part of the mail server.
2) Click on Computer Name in the left panel.
3) Click on Server Properties in the right panel. This brings up the Properties for Mail Server.
Properties window have a lot of settings one will have to use the standard setup and it describes as under:
There are three different authentication methods one can use;
Local Windows Accounts.
Active Directory Integrated.
Encrypted Password File.
One can use port 110 because this is the standard port for the POP3 protocol. If one changes this, make sure you notify all users so they can configure their email clients to use this other port. Also make sure you restart the POP3 service if you change this.
Four options to choose between if one can change this, remember that you must restart the POP3 service.
None - Nothing is logged.
Low - Only critical events are logged.
Medium - Both critical and warning events are logged.
High - Critical, warning and informational events are logged.
Root Mail Directory:
If one do not want to use the default Mail Directory than choose another one. Make sure the path is not more than 260 characters and do not store to the root of a partition can be used. If you later change the store, and there are still emails in one or more boxes, one must have to move manually the folders in which there are emails to the new location. You must also reset the permissions on the directory by using winpop set mailroot.
Enable SPA if one want to have a secure communication between email sever and email client. This will send both the user name and password encrypted from the client to the server, instead of sending it in clear text. SPA supports only Local Windows Accounts and Active Directory Integrated Authentication. It is recommended to use this. Remember to restart the POP3 service if you change this.
How to create a mailbox:
The Setup Wizard created a domain to us, so we do not need to create this manually. If you did not use Manage Your Server to install, add the domain manually by clicking the server name in the left panel and then click new domain in the right panel. Remember to set the properties before you add the domain.
Click on your domain in the left panel.
Click Add Mailbox in the right panel.
This will open up the Add Mailbox window.
Enter mail account name in Mailbox Name.
Enter the password.
A message will pop-up and tell you how to configure the email clients. Read this, and notice the difference when using SPA or not. Click ok.
Configure the SMTP Server:
Actually, that's it! It is this simple to configure the POP3 part. But it is not yet working as we want, we have to configure the SMTP part to be able to receive and send emails. all the POP3 is doing is pop the emails out to the clients. Its the SMTP server that is communicating with other SMTP servers and receives and sends emails.
Open Computer Management
Expand Services and Applications, expand Internet Information Service
Right click Default SMTP Virtual Server and click Properties
Click the Access tab
Click the Authentication button and make sure Anonymous Access and Integrated Windows Authentication is enabled.
Click the Relay button and make sure Allow all computers which successfully... is enabled and Only the list below is selected.