In inc/admin_pref.html.php, make sure the SMTP select option looks like this:
<SELECT NAME="mail_method">
<OPTION VALUE="local"<?php echo htmlspecialchars($db_settings['mail_method']) == 'local' ? ' selected' : ''; ?>>Sendmail</OPTION>
<OPTION VALUE="smtp" <?php echo htmlspecialchars($db_settings['mail_method']) == 'smtp' ? ' selected' : ''; ?>>SMTP Server</OPTION>
<OPTION VALUE="mail" <?php echo htmlspecialchars($db_settings['mail_method']) == 'mail' ? ' selected' : ''; ?>>PHP mail()</OPTION>
</SELECT>