The error indicates that it could not reach the server, or thinks that it does not exist, or couldn't connect to it. Which would lead me to think that perhaps they are using a non-standard port, or that your machines IP is not one that they accept traffic from. I did some quick googling and came up with the following URL:
http://www.daniweb.com/web-development/php/threads/355029/page2(http://www.daniweb.com/web-development/php/threads/355029/page2)
This person is reporting the same error for their own custom code.
Out of curiosity in your php.ini do you have a
SMTP=
smtp_port=
set?