I think I should share this as it takes me a night to figure out what's wrong. Hopefully in the coming patch this could be patched in a more elegant way.
Anyway, my problem is the SMTP server (Verizon/yahoo) requiring authentication for outgoing email. However the code by default does not enforce authentication (bug), even you set the SMTP authentication credential in the main configuration file 'include/setting.php'. So I have to forcefully enforce SMTP authentication as below:
1. Set a global value in the main configuration file 'include/setting.php'' as below:
define('SMTPAuthReq','true');
2. In the file "includes/notification.class.php', right above the line "$this->Username = SMTPLOGIN;", add the following code:
$this->SMTPAuth = SMTPAuthReq;
$this->Username = SMTPLOGIN;
After this my SMTP notification finally worked!