Migrate from GoDaddy to Rackspace -- they have options for standard e-mail or Hosted Exchange.
Rackspace E-mail - $2 per mailbox. $10 per Hosted Exchange Mailbox - per month.
The other option you could look into for your particular setup is HMailserver.
If I were you I would stick to Rackspace or another hosted solution because its easier to manage and the costs are lower. Plus you'll have their excellent customer support available to you.
I have to agree. I tried setting it up once using this guide and a couple others. The problem is the components are so vast. First, you have to start out with a solid base understanding of DNS - which is a beast in and of itself.
( I have DNS servers running, but they are bare-bones - you have to remember always, after you have the core functionality of a technology set up, then you have to think about A) best practice B) security )
Afterward, you have to learn the ins and outs about how mail servers actually function as well as moving forward interpreting and configuring each individual element of the server, including Postfix, Dovecot, Spamassasin, etc. It's really a huge project. I got very close to actually being able to send/receive mail locally, without any mind to locking it down at all. I've moved on. I've been meaning to give hmail a try, but other things have taken priority. Best of luck to anyone that attempts this.
Stick it on Amazon's EC2 for 12 months.
As far as software goes if you aren't comfortable with Linux and cannot afford Exchange server then this one is decent for the cost ($0). It supports almost features that a sub-100 user deployment would need (but is e-mail only, no calendars, directories, etc).
Zimbra is fairly popular ("open source exchange replacement") but is Linux only.
PS - You also cannot really run a mail server on a residential internet connection anyway since most decent spam-lists blacklist IPs used (since they're so often trojan infested zombies anyway).
For those speaking about self-hosting, I figured I'd mention this. I did try doing this on Linux once, and it was horribly complex ( and I'd consider myself something like a level 5/10 linux guru ). May or may not work for an alternative for those thinking about tackling this. I haven't got around to setting it up, ( just got a new server ) but if I do I will keep track of my steps and caveats and share if anyone is interested.
What OS is on the computer?
I needed to put together a basic web & mail server for a family member, and I simply used Windows 2003 Server along with the free hMail Server mail server for SMTP/POP3 access.
I'm sure you can do a web search for "free email servers" + "Linux" or "Windows" and be good to go in a matter of minutes.
Hmailserver can do the same thing and is free. No mapi but you get imap which should suffice. Then you're only pst contents can be calendar & contacts data. Less for Outlook to mangle. For a clientless solution you could whip up a robocopy script that you execute remotely with pstools to turn off outlook and sync the pst files.
I messed around with hMailServer awhile ago and it wasn't that bad to set up. Administering an email server would be the harder part I think. Blocking spam, proper settings, and backing everything up in case something happens.
Keep in mind running any kind of server on a home internet connection is usually against the ISP's rules.