smtp mail not working in 4.1 (288)

Hello,
I am getting a 501 smtp error in 4.1 build 288
I verified that I can send a php mail using the mail function.
<?php

$to = "frocco@stemc.org";

$subject = "Hi!";

$body = "Hi,\n\nHow are you?";

if (mail($to, $subject, $body)) {

echo("<p>Message successfully sent!</p>");

} else {

echo("<p>Message delivery failed...</p>");

}

?>
The above works fine.
In my PHPRunner app, I get this error:
mail() [function.mail]: SMTP server response: 501 Syntax error, parameters in command "MAIL FROM:<PO Master>" unrecognized or missing
Thanks
Frank