I apologize, then let me start with a different point. Have you created a new Email Active response Connector under the LEM Manager? The steps according to SolarWinds are as follows:
Log into the LEM Manager
Select Manage > Appliances for the LEM Console
select the gear next to your LEM manager and select Connectors
enter Email Active Response in the search box
click the gear nes to the master connector and select New. You should get a new window.
Enter an Alias
Enter a mail host (note if you use a hostname, ensure DNS resolution form the manager)
Enter a Port
Select your protocol: SMTP, SSL, or TLS
enter a return address email
enter a return address display name
enter authentication server username and password
Enter a test email address
click save
Locate the new connector, it will have a grey status icon
click start from the gear's drop down menu. Then test.
I hope this helps as a starting point. Maybe next time I will double check the section I am browsing before I jump to an immediate answer. And if you have already tried this, let me know. I will reach out to our LEM guru and see what he says.