Both 127.0.0.1 and localhost refer to your own computer rather than your ISP mail server. This is a technique used by some anti-virus (AV) applications to intercept mail in order to scan it for viruses. Sometimes this doesn't work properly and Outlook Express is then unable to send or receive messages. The server name in Outlook Express is changed by the program, so no matter how many times you change it to the correct name, it will be changed back by the AV program. It is far simpler and more effective just to turn off the e-mail virus scan as this scan is not necessary to protect your computer and often creates conflicts with Outlook Express. The AV system scan is all that is needed for full protection. After disabling the e-mail AV scan you can change the server to its correct name and it will remain.

Bet you have some shit security application or AV probably Norton or McAfee