SSRS Email subscription is not working

Team
I am trying to create a SSRS email subscription but it's failing saying "Illegal characters in path" and referring the pickupDirectory. I have provided "C:\inetpub\mailroot\Pickup" which is my pickup directory.

emailextension!WindowsService_0!1978!08/30/2014-14:59:11:: e ERROR: Error sending email. Exception: System.Net.Mail.SmtpException: Failure sending mail. ---> System.ArgumentException: Illegal characters in path.
   at System.IO.Path.CheckInvalidPathChars(String path)
   at System.IO.Path.IsPathRooted(String path)
   at System.Net.Mail.SmtpClient.GetFileMailWriter(String pickupDirectory)
   at System.Net.Mail.SmtpClient.Send(MailMessage message)
   --- End of inner exception stack trace ---
   at System.Net.Mail.SmtpClient.Send(MailMessage message)
   at Microsoft.ReportingServices.EmailDeliveryProvider.EmailProvider.Deliver(Notification notification)

I have configured local SMTP server and I have tested through powershell script by sending an email and which works. The example i tried was below

Send-MailMessage -SMTPServer localhost -To chittaranjan.jena@gmail.com -From system@xxx.com -Subject "This is a test email" -Body "Hi, this is a test email sent via PowerShell"

One thing i noticed though is if I copy a file like email.txt and putting the From:, To: Subject: and email inside the file and move it to C:\inetpub\mailroot\Pickup, it didn't send the email and put it into the bad C:\inetpub\mailroot\Badmail folder

My configuration is as follows


   <Configuration>
          <RSEmailDPConfiguration>
            <SMTPServer></SMTPServer>
            <SMTPServerPort>
            </SMTPServerPort>
            <SMTPAccountName>
            </SMTPAccountName>
            <SMTPConnectionTimeout>
            </SMTPConnectionTimeout>
            <SMTPServerPickupDirectory>
              C:\inetpub\mailroot\Pickup
            </SMTPServerPickupDirectory>
            <SMTPUseSSL>
            </SMTPUseSSL>
            <SendUsing>1</SendUsing>
            <SMTPAuthenticate>
            </SMTPAuthenticate>
            <From>system@mydomain.com</From>
            <EmbeddedRenderFormats>
              <RenderingExtension>MHTML</RenderingExtension>
            </EmbeddedRenderFormats>
            <PrivilegedUserRenderFormats>
            </PrivilegedUserRenderFormats>
            <ExcludedRenderFormats>
              <RenderingExtension>HTMLOWC</RenderingExtension>
              <RenderingExtension>NULL</RenderingExtension>
              <RenderingExtension>RGDI</RenderingExtension>
            </ExcludedRenderFormats>
            <SendEmailToUserAlias>True</SendEmailToUserAlias>
            <DefaultHostName>
              xx.xx.xxx.xxx
            </DefaultHostName>
            <PermittedHosts>
            </PermittedHosts>
          </RSEmailDPConfiguration>
        </Configuration>

 I have gone through different posts in the web and tried to do different changes as suggested by nothing worked.

 Regards
 

---

Chittaranjan