If you ever encounter this error when trying to send emails or test email settings (note that the computer name will be different in the error).
This means that the KC7 folder on the host machine does not have proper read/write permissions so the text file where the error is written to could not be created.
To resolve this go to the host computer and open File Explorer or Computer and open your C: drive. Look for the KC7 folder and right mouse click the KC7 folder. Choose properties. Click on the "security" tab.
You should see the user "Everyone" listed under "Groups or user names." If you do, look down below under the "permissions for Everyone" and make sure the user has full control including read/write. If they do not or they are not added there, click "Edit" and then apply the appropriate permissions or add in the user "Everyone" by clicking "add" and typing in "everyone" without the quotes, setting all the permissions and clicking apply.