Hi Mavis,
Checking with the current shipping version of Purchase Orders, I was able to successfully send and receive an emailed purchase order. So the problem is likely with your setup, but I can't say that with 100% certainty. You probably should be in contact with your Adagio consultant to futher determine the cause.
Check that the settings in the Email Setup are correct (whether you use the MAPI or Direct method of sending emails).
What happens if you open the Email Setup and click the 'Test Email' button?
Try sending the email to the Queue rather than Now, to see if a different route has differing results.
It's interesting that your error indicated a Fax error when you were trying to email.
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Regards,
Softrak Tech Support