Hi BoeingBoy,
Not come across this before but 127.0.0.1 is a "Loopback network connection"
In other words it's a bit like talking to yourself !
Hopefully some of the following might help or at least give more of a clue as to what's going on....
You need to check your e-mail account settings :
Start Outlook Express, Click on Tools / Accounts and then the "Mail" tab.
Click once on your e-mail account name to highlight it then click "Properties" and then the "Servers" tab.
If you see 127.0.0.1 in either the Incoming mail ( POP3 ) box or Outgoing mail (SMTP) box then this explains the problem ( but not why it happened ) and it should be changed back to your Service providers settings.
You can usually get these from your ISP's web site and will be something like POP3.btopenworld.com & SMPTP.btopenworld.com etc.
( Check with BT - these might not be the same as yours ).
Change them if needed, click OK then Close the window.
Close Outlook Express and restart it.
See if e-mail now works - If it does
If not go back through the above procedure and if the settings you entered have changed,
like back to the 127.0.0.1 then you may have a virus
that is doing this and you need to run the latest virus scanning utility.
If from the outset the settings appear OK you could try removing your e-mail account from Outlook Express ( Tools / Accounts / Mail / Remove ) and then adding it again using the correct settings from your ISP.
If none of this works then maybe someone else will come with some ideas !
( It could also have something to do with firewall settings ).
Good Luck
Coconutty