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I have SQL Server 2000 installed on Windows 2003 Server. We do not have SMTP installed on the box, so when creating a notification for a failed SQL Agent job, the email is not sent.

Is there a way to send out a notification without installing SMTP on the box?

A: 

With xp_sendmail of SQL 2000 you don't need SMTP on the box, you need a MAPI Profile. see: How to configure a mail profile (Windows). In the MAPI profile used by SQL you can specify the prefered delivery options, eg. Exchange server conectivity, or the SMTP server used by the rest of your organization.

From KB 263556 INF: How to Configure SQL Mail:

SQL Server 2000 SQL Mail establishes an extended MAPI connection with a mail host, while SQLAgentMail establishes a separate extended MAPI connection. Both SQL Mail and SQLAgentMail can connect with Microsoft Exchange Server, or a Post Office Protocol 3 (POP3) server.

NOTE: Due to the limitation of only providing extended MAPI support, SQL Server 2000 requires a Microsoft Outlook 2000 client (or later version).

Before you configure SQL Mail, you should test the mail profile used by the mail client to verify that you can use it to send and receive e-mail to and from the mail server.

Remus Rusanu
Using MAPI profiles will make a mess of your server, cause hanging reboots that require you to travel to the server physcally, and not send mail at critical moments. From your other posts you're a very knowledgeable person, I can't believe you even suggest this.
Andomar
@Andomar: The MAPI mess is the reason SQL 2005 deprecated the SQL Mail infrastructure (based on MAPI) and replaced it with SQL Database Mail infrastructure (based on SMTP). As the original post specifies SQL 2000, I have no choice but to point to the 'proper' configuration of SQL 2000. Unfortunately, that involves MAPI.
Remus Rusanu
@Remus: No proper configuration involves MAPI, period. MAPI guarantees a world of hurt. I've downvoted your answer-- I hope you understand.
Andomar