In short that usually means that there is no Server on the other end. A Simple test would be to try to Telnet to that IP address and and see if you get a greeting from a SMTP server.
Example:
Telenet xxx.xxx.xxx.xxx 25
Replace the XXX with the IP address. If you do this from the Start -> Run the window will open & close if there is no SMTP server on the other end. If you do it from the command prompt you will see more detail:
Example (sucess):
C:> telnet 192.168.1.14 25
220-eWall v3.0.214 + ArGoSoft Mail Server SMTP Module v.1.0.5.3 at Sun, 12 Oct 2 008 18:08:23 GMT
220-Sending unsolicited commercial or bulk e-mail to Top Cat Computing's computer network is prohibited. Other restrictions are found at
http://www.topcatcomputing.com/antispam.aspx. 220 Effective immediately: Top Cat Computing will no longer accept connections from IP addresses which have no reverse-DNS (PTR record) assigned.
Example (Failure):
C:>telnet 192.168.1.7 25
Connecting To 192.168.1.7...Could not open connection to the host, on port 25: Connect failed