I'm also getting this exact error with the notifications feature. Comment emails go out ok, and when I send a notification for a new blog post, the main email address receives the Update email, but nobody on the notification list receives the email. Something doesn't appear to be parsing correctly. I only deduce that because the notification is sent out to the author's email address just fine.
For example, the author email address for my blog is
furo@furo.com, and I have two addresses on the notification list that are different. One is another of my own addresses, and the other is that of a visitor to my site. Neither of the added addresses receive the emails.
I have the blog setup to use SMTP, as it is on an NT 4.0 server and does not have sendmail available. When setting MailTransfer to debug in the mt.cfg file, I see no STDERR file on the web server when I send a notification, which does not result in an error in that case. Changing it back to SMTP and sending a notification once again produced the error as follows:
Error sending mail (Error sending mail: No recipient! ); try another MailTransfer setting?
-Furo