11.0 SP9 smtp setup

I have been struggling to get SMTP up and running in any configuration. Initially I tried setting our internal SMTP relay using Mail SMTPServer="x.x.x.x". Nothing was received by the relay server. Next I setup SMTP on the innovator server itself, verified it could send to the relay server and changed the Mail config line to Mail SMTPServer="127.0.0.1", but still no joy. When a new PR is created an email event is recorded in the logfile in "C:\Program Files (x86)\Aras\Innovator\Innovator\Server\logs" but no errors are reported. I have tried this on 2016 and a 2012 R2 servers. Is there something missing from the installation instructions?

<?xml version="1.0" encoding="UTF-8"?>
<Innovator>
 <UI-Tailoring login_splash="../images/aras-innovator.svg" branding_img="../images/aras-innovator.svg" product_name="Aras Innovator" banner_url="../scripts/banner.aspx" banner_height="50"/>
 <operating_parameter key="debug_log_flag" value="true"/>
 <operating_parameter key="DebugServerMethod" value="true" />
 <operating_parameter key="debug_log_limit" value="10000"/>
 <operating_parameter key="debug_log_pretty" value="true"/>
 <disabled_operating_parameter key="performance_logging" value="cpu"/>
 <operating_parameter key="xslt_processor_debug" value="false"/>
 <disabled_operating_parameter key="email_debug_option" value="file"/>
 <License lic_type="Unlimited" lic_key="x" act_key="x" company=""/>
 <Mail SMTPServer="127.0.0.1"/>
 <operating_parameter key="temp_folder" value="C:\Program Files (x86)\Aras\Innovator\Innovator\Server\temp\"/>
 <operating_parameter key="ServerMethodTempDir" value="C:\Program Files (x86)\Aras\Innovator\Innovator\Server\dll\"/>
 <operating_parameter key="debug_log_prefix" value="C:\Program Files (x86)\Aras\Innovator\Innovator\Server\logs\"/>
 <AgentService InnovatorToServiceAddress="">localhost:8734/.../>
 <DB-Connection id="InnovatorSolutions" database="InnovatorSolutions" server="(local)" uid="innovator" pwd="xxxxx"/>
</Innovator>

Event detail:
<event time="2017-12-04 11:47:18Z" reason="Stage1" TickCount="8917718" dt="0" message="&amp;lt;BODY&amp;gt;&amp;lt;font size=&amp;quot;+1&amp;quot;&amp;gt;&#xD;&#xA;&amp;lt;p&amp;gt;You have been assigned a new change management activity in Aras Innovator (details below). Please log in to Innovator to complete the work.&amp;lt;/p&amp;gt;&#xD;&#xA;&amp;lt;p&amp;gt;&amp;lt;font size=&amp;quot;+0&amp;quot; style=&amp;quot;font-variant: small-caps&amp;quot;&amp;gt;Activity: &amp;lt;/font&amp;gt;${Item[@type=&amp;quot;Activity&amp;quot;]/name}&amp;lt;br/&amp;gt;&#xD;&#xA;&amp;lt;font size=&amp;quot;+0&amp;quot; style=&amp;quot;font-variant: small-caps&amp;quot;&amp;gt;Instructions:&amp;lt;/font&amp;gt; ${Item[@type=&amp;quot;Activity&amp;quot;]/message}&amp;lt;/p&amp;gt;&#xD;&#xA;&amp;lt;p&amp;gt;&amp;lt;font size=&amp;quot;+0&amp;quot; style=&amp;quot;font-variant: small-caps&amp;quot;&amp;gt;${Item[@type=&amp;quot;ItemType&amp;quot;]/label}:&amp;lt;/font&amp;gt; ${Item[2]/item_number}&amp;lt;br/&amp;gt;&#xD;&#xA;&amp;lt;font size=&amp;quot;+0&amp;quot; style=&amp;quot;font-variant: small-caps&amp;quot;&amp;gt;Title:&amp;lt;/font&amp;gt; ${Item[2]/title}&amp;lt;/p&amp;gt;&#xD;&#xA;&amp;lt;/font&amp;gt;&#xD;&#xA;&amp;lt;B&amp;gt;&#xD;&#xA;${substring(&amp;quot;Some information needed to form this email was not found. Please contact your system administrator to ensure that the sender has privileges to view the items.&amp;quot;, 1, (1-count(Item[2]))*158)}&#xD;&#xA;&amp;lt;/B&amp;gt;&#xD;&#xA;&amp;lt;/BODY&amp;gt;" />

Cheers