Drupal uses the php mail() function to send emails by default.
 
Here is a module which adds SMTP functionality to Drupal. More specifically, the ability for your site to send mail using an SMTP server that requires authentication.
 
Link to Module http://drupal.org/project/smtp
This module is currently in Beta stage for Drupal 6.x, i just tried it works fine and you can use this too. remember to read INSTALL.txt before installing this module as there are certain dependencies which are needed to have this module working.
 
This module uses the smtp and mail class’s from PHPMailer. http://phpmailer.sourceforge.net