I am using 7.1.8 version and I tried this first time. Actually I created Email account,there sender and receiver connectivity was successful.After creating the case,in attachments I clicked on correspondence and I am getting the above mentioned error.
You will also need to enable 'starttls' (I believe this is labelled 'Use SSL' in the PRPC Email Account Rule form).
Additionally (as per other suggestions here): if this still doesn't work : you probably should aim to get a Java Stack Trace (and possibly even SMTP debug) information in order to troubleshoot further.
You should have a 'test connection' button on your Email Account Form in the PRPC Designer Studio - if it is failing to connect - check the PegaRules.log for errors.
You can also enable DEBUG logging for the PRPC 'SendEmail' function (in the 'Default' Library) - use SMA (AKA 'prsysmgmt') to enable DEBUG for the library functions. (From memory: I believe you have to enable DEBUG at the library level rather than at the level of a single function, but I could be wrong).