It would be easier to help you if you provided the error message that your client produces when you set the SMTP server to localhost. The error messages often give a good indication of what the problem is.

You are missing a colon after "use Net::SMTP", in the client.

You are missing a declaration of $smtp to satisfy strict, in the client (e.g. "use $smtp = ...").

You are missing "use Carp;", in the server.

With these three changes made, your code works for me.