I restarted the aolserver and then tried again . This time it sent mail with out error.
But it did not come to my inbox. I searched for that mail and found it under
/var/qmail/queue/mess/5/100699
I have done the part of alias and queue as mentioned in the webmail doc
The content of my /var/qmail/users/assign file is
+webmail-:postgres:505:505:/usr/local/aol32/qmail/alias:-::
.
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rcpthosts is
server.com
==============
virtualdomains is
webmail.server.com:webmail-wm
===============
server.ini file under parameters
ns_param AliasDirectory "/usr/local/aol32/qmail/alias"
ns_param QueueDirectory "/usr/local/aol32/server/server/queue/"
