Thanks to Twitter I have had a lot of help with the SQL Mail issue that I am having. Unfortunatly I still have not been able to resolve the issue at this time and I am still waiting on hold for MS to help me out with the main issue that is Outlook will not correctly set up the mail profile for some reason and continues to crash. I did however get some good advice from @sqlsoldier and @sqlconcepts. I had mentioned just doing away with SQL Mail and using database mail instead.. This way I do not care about outlook and the mail profile. My issue was that the DTS packages are using a send mail function and DTS does not support DB Mail. They had the idea of replacing all those send mail functions with a t-sql script and call sp_send_dbmai. I have not yet been able to talk to the app devs about this but it seems to me like this is the way to go.
This is yet again more proof on how AWESOME the SQL community is and how Twitter can be very helpful.
Thanks everyone for your help and if MS ever gets on the phone I will still let you know what they say and if they resolve my issue.