Redmine

This is the expected behaviour if everything is properly configured in Admin -> Settings -> Email notifications.
Please read FAQ#Email-notifications-are-not-working and SubmittingBugs before reopening.

I have read Both the FAQ's
I will give you the exact steps i do to install redmine

before that, here is the details of my redmine
C:\redmine-0.8.7>ruby script\about
About your application's environment
Ruby version 1.8.6 (i386-mingw32)
RubyGems version 1.3.1
Rails version 2.1.2
Active Record version 2.1.2
Action Pack version 2.1.2
Active Resource version 2.1.2
Action Mailer version 2.1.2
Active Support version 2.1.2
Application root C:/redmine-0.8.7
Environment development
Database adapter mysql

I do not understand where to change the environment to Production
Anyways...
1. I extract the FOLDER of redmine0.8.7 in c:\
2. Go to Mysql Prompt, create db redmine create database redmine character set utf8;
3. change database.yml to
production:
adapter: mysql
database: redmine
host: localhost
username: redmine
password: my_password

4. rake config/initializers/session_store.rb RAILS_ENV=production (rails_env written at first doesnt seem to work)
5. rake generate_session_store
6. rake db:migrate RAILS_ENV=production
7. rake redmine:load_default_data RAILS_ENV=production
8. ruby script/server webrick -e production

The log of development seems to get filled...and there is no such TO: field in the log. Somehow the folder and the application doesnt seem to be synchronised.
Is simply extracting the zip redmine and working on the command prompt synchronises it???

I didnot install any required software via command prompt becuase my organization prevents me from doing so. I had download them all.
Please look into it as this is really critical in our development phase.

I guess you've solved your problem, if not, file a message on the forum, it's not an issue with redmine core as no one seems to have the same issue.