It sounds like a server problem. This is probably more likely if the server is Windows.
You can do some testing with the test scripts here: http://www.tectite.com/vbforums/showthread.php?t=62
In the $ADDR setting, try listing more than one email address and see what result you get (comma separated).
I can also send you a test script which will try your CC field too.
If you're getting the same problem with the test scripts, please let me know the server type and the PHP version. I might be able to make some more suggestions.