Alerts stopped working on our TFS 2005 server after I upgraded our internal mail server (new IP address). In order to get them working again I had to change SMTP server address on TFS. Configuration file with SMTP settings is located in C:\Program Files\Microsoft Visual Studio 2005 Team Foundation Server\Web Services\Services folder. It is called web.config. Open it with notepad and modify the following keys in bold.
<add key=”ConnectionString” value=”Application Name=TeamFoundation;Persist Security Info=False;Initial Catalog=TfsIntegration;Data Source=TFSServerName;Integrated Security=SSPI”/>
<add key=”eventingEnabled” value=”true” />
<add key=”DetailedExceptions” value=”true” />
<add key=”emailNotificationFromAddress” value=”Senders Email Address” />
<add key=”smtpServer” value=”Your SMTP Server Name” />
Once you’ve done this, restart IIS service.