You need to modify the RSreportserver.config file to have each external domain permitted...

<PermittedHosts>

<HostName>Adventure-Works.com</HostName>

<HostName>hotmail.com</HostName>

</PermittedHosts>

You won't need to restart reporting services.

I'm trying to work around the issue of permitting all domains, but haven't got it to work yet.

<SendEmailToUserAlias>False</SendEmailToUserAlias>

<DefaultHostName></DefaultHostName>

<PermittedHosts>

<HostName></HostName>

</PermittedHosts>

I have tried different combinations like filling in defaulthostname, removing hostname, removing permittedhosts. I haven't tried a wild card yet in HostName. If anybody finds out, please let me know...I'm using a remote smtp server.