Sounds like moodle and your smtp aren't getting along too well. We'll get into that in a minute
When a user creates a new account and presses submit, moodle takes the user information and attempts to verify it -- it sends a link to the email address specified that the user has to click on....when the user clicks it, it loads a page on your moodle site and sends that page certain information; when that page is called and the information recieved, Moodle knows that someone must have clicked on the link to call the page and activates the account. This keeps kids from creating two login names -- one that is anonymous so they can see the test; and one that is real so they can take it. Also prevents some eVandalism.
It sounds like your server cannot send those initial emails to the user....and it can't because it doesn't have the correct software to do it with. You'll have to manually setup a SMTP (Simple Mail Transfer Protocol) server and possibley a user for moodle to use. That's server software seperate from Moodle. What type of OS and server software are you running? (Your site was down when I looked)
Now there is another option you can try (although I don't believe you can do it with Yahoo, maybe with another email carrier). You can try to use your email username, pass and host to send the mail. Although I'm about 99.9% sure Yahoo has gone to great extents to keep you from doing that, with another host you'd write
smtphostname: mail.yahoo.com
smtpuser: likmeng
smtppass: ******
But again, I doubt it'll work with yahoo....you'll likely have to do it through your ISP (Internet Service Provided). If you have cable, dsl, or if you're in an institution (school or university), you can likely use that email information.
Best of luck,
Mark