PHP has nothing to do with Apache. In actaul fact you can run PHP stand alone with no server.

I have tried setting the MAIL SMTP to my ISP SMTP server but still with no joy. I honestly do not think that is has anything to do with apache or local host. I think it has more to do with windows 2000. Because the function works on my Win 98 machine with Apache.

Could I just ask what you have your SMTP server set as in your php.ini file?