No mail received in inbox with XAMPP 1.8.0, MercuryMail and mail()

Question

I upgraded my local server using XAMPP 1.8.0 which contains Apache 2.4.2, PHP 5.4.5 and MySQL 5.5. I send mails with PHP mail() function by running MercuryMail, but no email received in my inbox.
Sending mails are working when I tested with Mozilla Thunderbird. And the mail() function seems to be working with no error issued.

I checked php.ini in my XAMPP installation path D:\xampp\php. I saw this below

[mail function]  
; XAMPP: Comment out this if you want to work with an SMTP Server like Mercury  
; SMTP = localhost  
; smtp_port = 25  

; For Win32 only.  
; http://php.net/sendmail-from  
; sendmail_from = postmaster@localhost  

; XAMPP IMPORTANT NOTE (1): If XAMPP is installed in a base directory with spaces (e.g. c:\program filesD:\xampp) fakemail and mailtodisk do not work correctly.  
; XAMPP IMPORTANT NOTE (2): In this case please copy the sendmail or mailtodisk folder in your root folder (e.g. C:\sendmail) and use this for sendmail_path.    

; XAMPP: Comment out this if you want to work with fakemail for forwarding to your mailbox (sendmail.exe in the sendmail folder)  
; sendmail_path = "\"D:\xampp\sendmail\sendmail.exe\" -t"  

; XAMPP: Comment out this if you want to work with mailToDisk, It writes all mails in the D:\xampp\mailoutput folder  
; sendmail_path = "D:\xampp\mailtodisk\mailtodisk.exe"  

I tweaked some combination of SMTP settings.
I commented out host and port

; XAMPP: Comment out this if you want to work with an SMTP Server like Mercury  
SMTP = localhost  
smtp_port = 25

I commented out sendmail_path, but it did not work. Mail could not be sent.

; XAMPP: Comment out this if you want to work with fakemail for forwarding to your mailbox (sendmail.exe in the sendmail folder)  
sendmail_path = "\"D:\xampp\sendmail\sendmail.exe\" -t"  

Again, I commented out anothor sendmail_path to work with mailToDisk

; XAMPP: Comment out this if you want to work with mailToDisk, It writes all mails in the D:\xampp\mailoutput folder  
sendmail_path = "D:\xampp\mailtodisk\mailtodisk.exe"  

It seems working, but no mail received in inbox. Nothing found in D:\xampp\mailoutput

In php mail log (D:\xampp\php\logs\php_mail.log), I found several log lines which likely saying mails were sending.

mail() on [D:\xampp\htdocs\....:127]: To: [email protected] -- Headers: MIME-Version: 1.0  Content-type: text/html; charset=text/html  Return-Path:Sithu <[email protected]>  From: Sithu <[email protected]>  Reply-To: Sithu <[email protected]>  
mail() on [D:\xampp\htdocs\....:127]: To: [email protected] -- Headers: MIME-Version: 1.0  Content-type: text/html; charset=text/html  Return-Path:[email protected]  From: [email protected]  Reply-To: [email protected]  
mail() on [D:\xampp\htdocs\....:127]: To: [email protected] -- Headers: MIME-Version: 1.0  Content-type: text/html; charset=text/html  Return-Path:Members <[email protected]>  From: Members <[email protected]>  Reply-To: Members <[email protected]> 

I also tried to comment out sendmail_from, but no luck.

; For Win32 only.  
; http://php.net/sendmail-from  
sendmail_from = postmaster@localhost  

Any configuration I'm still missing?

[Edit]
Mercury mail server is running.
Whenever I updated php.ini, I restarted Apache server.

Answer 1

I just need to configure D:\xampp\sendmail\sendmail.ini By default, it contains the line

smtp_server=mail.mydomain.com

I had to change it to

smtp_server=localhost

No need to configure this in the older versions of XAMPP.
The correct configuration for [mail function] in D:\xampp\php\php.ini is

; XAMPP: Comment out this if you want to work with an SMTP Server like Mercury
SMTP = 127.0.0.1
smtp_port = 25

; XAMPP IMPORTANT NOTE (1): If XAMPP is installed in a base directory with spaces (e.g. c:\program filesD:\xampp) fakemail and mailtodisk do not work correctly.
; XAMPP IMPORTANT NOTE (2): In this case please copy the sendmail or mailtodisk folder in your root folder (e.g. C:\sendmail) and use this for sendmail_path.  

; XAMPP: Comment out this if you want to work with fakemail for forwarding to your mailbox (sendmail.exe in the sendmail folder)
sendmail_path = "\"D:\xampp\sendmail\sendmail.exe\" -t"

; XAMPP: Comment out this if you want to work with mailToDisk, It writes all mails in the D:\xampp\mailoutput folder
; sendmail_path = "D:\xampp\mailtodisk\mailtodisk.exe"

Now, I'm receiving mails in my inbox. Please note that "D:\xampp\" is my XAMPP installation path.