I'm using version 4.5.0

I've created an SMTP notification channel with below parameters:
Server=smtp.mailgun.org
RetryCount=1
Port=25
TLSMode=NONE
LocalHostName=localhost
FromName= xxx.mailgun.org
FromAddr=xxx.mailgun.org
Password=<password given by Mailgun>
MailEncoding=utf8
IsHTML=no

I get Status=Failure, Error message=Driver error in Send Notification test. Mailgun parameters are OK. I have tested email delivery using Windows PowerShell.

Please help.

Increase sever debug to level 6 (either globally or for tag ncd.smtp), then check server logs for errors. SMTP driver logs with tag "ncd.smtp".

Log:
2025.08.01 12:09:09.879 *D* [nc                 ] SendNotification: sending message to "[email protected]" via channel "Mailgun"
2025.08.01 12:09:09.879 *D* [nc                 ] Message to "[email protected]" via channel "Mailgun" dequeued
2025.08.01 12:09:09.879 *D* [ncd.smtp           ] Sending mail with url="smtp://smtp.mailgun.org:25", to="[email protected]", subject="subject4", login="[email protected]"
2025.08.01 12:09:53.415 *D* [ncd.smtp           ] Call to curl_easy_perform("smtp://smtp.mailgun.org:25") failed (56: response reading failed (errno: 0))
2025.08.01 12:09:53.415 *D* [nc                 ] Driver error for channel "Mailgun", retrying in 30 seconds, 2 retries left
2025.08.01 12:10:23.415 *D* [ncd.smtp           ] Sending mail with url="smtp://smtp.mailgun.org:25", to="[email protected]", subject="subject4", login="[email protected]"
2025.08.01 12:11:04.017 *D* [ncd.smtp           ] Call to curl_easy_perform("smtp://smtp.mailgun.org:25") failed (56: response reading failed (errno: 0))
2025.08.01 12:11:04.018 *D* [nc                 ] Driver error for channel "Mailgun", retrying in 30 seconds, 1 retries left
2025.08.01 12:11:34.019 *D* [ncd.smtp           ] Sending mail with url="smtp://smtp.mailgun.org:25", to="[email protected]", subject="subject4", login="[email protected]"
2025.08.01 12:11:35.754 *D* [ncd.smtp           ] Call to curl_easy_perform("smtp://smtp.mailgun.org:25") failed (67: Login denied)
2025.08.01 12:11:35.754 *D* [nc                 ] Driver error for channel "Mailgun", message dropped

Driver configuration:
Server=smtp.mailgun.org
Port=25
LocalHostName=localhost
TLSMode=NONE
[email protected]
[email protected]
Password=<password>
MailEncoding=utf8
IsHTML=no

(56: response reading failed (errno: 0)) - this means that we did not get some response from the mail server that we expected. "we" is actually libcurl that is used in NetXMS to work with SMTP. 
Since you use TLSMode=NONE which means that communication is unencrypted, you can install Wireshark and check what exactly communication is happening with the server. But it could be that server expects TLS, you can try other settings of TLSMode (and port)