Some users have problems getting mail to send with their ISP email settings. I think that doing this with PEAR is the way to go since it is unlikely that the mail server would allow you to send email without authentication.
Your path to PEAR should just point to the PEAR directory that you have, it is probably in your php folder. It is looking for the Mail.php file that is in this location, you can check it yourself to see if you have the folder and file there.
If you are having problems testing with your ISP email server it may be worth trying to use your own SMTP server locally. If you have XP pro you should have IIS available to you. If so you should try enabling the smtp server from here. If you need to install IIS to get this feature enabled just make sure that you stop the server web server so it does not interfere with your Apache server.
