Email server settings causing workflow issue after migration from WSS 3.0

I have recently upgraded from WSS 3.0 to Sharepoint Foundation 2010.

Everything is working pretty good.  However, I am trying to use a workflow that has worked for years on the old WSS 3.0 site but is not working on the new site.  It appears to be an issue with my email server configuration in Sharepoint.  The workflow is setup to email users when a new document is uploaded to a document library.

In Sharepoint Central Administration I have two servers listed under "manage servers in this farm".  The first one is the Sharepoint server and the second is my email server.  For the email server under "Services Running" it shows"Not Configured."  Under the status column it shows "No Action Required".  How do I configure the email service?  I have already configured everything under the "Outgoing email Settings".  What have I left out?  Please help!!  It is probably something really small and stupid that I have failed to do.  thanks for your help.