I have the formmail script from Matt's Script Archive myself and it works fine. Then again, I run sendmail on linux...
Your problem interests me. I don't think it's a permissions problem. One problem I can think of is that, if you download the unix-based script, then FTP it to a Windows server, the nl end of the path on the first line would change to cr. That will screw things up. Unfortunately, I am pretty new to perl myself, and I only know how to fix that when a Windows perl script comes to a unix machine, not vice versa which could be your problem.
To basically describe what I mean: Say I download a perl script that was created on a windoze macine. I MUST run "dos2unix filename" at a unix command line to convert it to work on unix.
Perhaps that's the similar trouble you are having, and you need to fond a way to convert a unix-based script to windows compatibility.
Another problem I can think of is this. That foarmail script from Matt's is great and all, BUT it was written BEFORE cgi.PM. It predates it. That could be a problem. Throughout my learning experience, I eventually plan on rewriting that script to comply with cgi.PM. If anyone else has already done it, I'd love to see it. I hope that helps, but like I said, I'm a newbie, too.
Good luck, friend.
Chris