When I activate HTML Email Templates it breaks my WordPress email functionality.
None of my wordpress sites would send emails from any installed form. Also, I would get this error when I would attempt to use the ‘Forgot Password’ button on the login page:
The e-mail could not be sent. Possible reason: your host may have disabled the mail() function.
As soon as I deactivate the plugin, all my problems go away. Can you reproduce this on your end? I’m running WP 3.8.1 on Nginx.