Sorry, @LibrarianLisAnn & @Harald, I was away for a day & didn't get to check any messages. My test emails don't work either, I just moved forward and skipped that part of the setup for now.
As for creating users, if that's still a problem - I don't create them at the host, instead I create them with the SMS SQL & they're created in the Security area of the database.
Visual Studio - I had to install the latest version, and then I don't get the error message anymore. I never looked or modified the web.config file to uncomment - if I have no problems, maybe I won't even check that right now.