Don't know about the encryption but I know how you could send HTML e-mails (Instead of plain text).
Use the Winsock control to connect to the SMTP server. Send this...

Helo SomeName
Mail from:[email protected]
Rcpt to:[email protected]
Data
Content-type: text/html
Charset=us-ascii
YourMessge
.
Quit

Or something Like that...