Here are step-by-step instructions to fix it. You need stunnel.
1) Download and Install: http://www.stunnel.org/download/stunnel/win32/stunnel-4.32-installer.exe
2) In start menu, go to stunnel folder and click on 'Edit
stunnel.conf'
3) Copy the following into stunnel.conf and save.
cert = stunnel.pem
socket = l:TCP_NODELAY=1
socket = r:TCP_NODELAY=1
debug = 7
output = stunnel.log
client = yes
[smtpg]
accept = 127.0.0.1:25
connect = smtp.gmail.com:465
4) Run stunnel
5) Go edit sendmail.ini and change to the following:
smtp_server=localhost and smtp_port=25
6) Restart GAE
Hope this helps!