have you tried leaving that setting empty, in most cases leaving that setting blank should work.
if that still does not work, you might not have a mail server installed on your server, you will need to check that you have a mail server running first.
You can test this by creating a blank php page and past this script in it:
$to = "firstname.lastname@example.org";
$subject = "Test mail";
$message = "Hello! This is a simple email message.";
$from = "email@example.com";
$headers = "From: $from";
echo "Mail Sent.";