[There's a reason that Yoda is the unofficial mascot of SBS.  Size indeed matters not.] WSUS unable to email notifications - THE OFFICIAL BLOG OF THE SBS DIVA
Mon, Jun 14 2010 23:12 bradley

WSUS unable to email notifications

Thank Ian Watkins.. I missed this one.  I'm going to guess that one of those authentication updates for .NET caused this but I'm not willing to pull them off just to confirm.  To fix, go into the WSUS console change the mail server IP address to 127.0.0.1.

 EVENT #    367668
EVENT LOG    Application
EVENT TYPE    Error
OPCODE    Info
SOURCE    Windows Server Update Services
CATEGORY    Core
EVENT ID    10052
COMPUTERNAME      SERVER
DATE / TIME      6/14/2010 11:05:03 PM
MESSAGE    The server is unable to send e-mail notifications.

Someone will probably comment that it was supposed to be 127.0.0.1 in the first place or something.
 

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