I commented out the following line and it worked.
; sendmail_path="C:\xampp\mailtodisk\mailtodisk.exe"
For good measure, I changed this to:
sendmail_path = "\"C:\xampp\sendmail\sendmail.exe\" -t"
I don't know why mailtodisk.exe is defaulted to being used, but it appears this simply writes the mail to a folder and it doesn't get delivered.