Hey Raj,

I had a similar issue, even my test mail was failing and it was giving similar sort of error.

While setting the db mail, in the SMTP server, I used the loopback address 127.0.0.1./ it can be even your IP address.(Anonymous authentication)

Even my test mail was failing, then I went to IIS Manager, select the Default SMTP server, and under General tab set the IP address as ALL Assigned.

Try this and see if it works.

Cheers,

Pavan.