Thanks for your reply, Jack.
1. The KB article does say the issue with 64-bit was addressed in SP1, so it shouldn't be an issue. We do have another 64-bit server where the mail is working. I have been comparing the servers and two differences stand out:
a) The working server has only one instance. The app is using the default instance.
b) The working server's Agent is using the local system account and the non-working server's agent is using a domain service account. I am not sure if/how this affects the notification.
This is the error in the job history: "Could not obtain information about Windows NT group/user 'sa', error code 0xffff0002.". Possible failure reasons: Problems with the query, "ResultSet" property not set correctly, parameters not set correctly, or connection not established correctly.
I made some changes yesterday and I did get an email to tell me the email notification failed. Hm. Also, the 'Send Test Email' works.
2. We will have multiple instances on this server so I would prefer to identify the instance. However, if best practice is to only use one SMTP account for all instances, I could identify the instance within the message. One SMTP account for all instances would mean less overhead. What are the disadvantages for this?