to test the email on a Windows server, you would need to use Mail For Windows, then change it to mail for Linux before uploading to the remote server.
I believe the smtp server address should be localhost, but you should double check the Mercury mail documentation.
The Return path is an optional parameter and is not needed.
to be honest with you, I have never been able to get email functionality working using Mercury Mail with xampp, I do all of my email testing on the live server instead of trying to use Mercury Mail.