This can be overwritten by doing the following:
Changing the maxRequestLength value in the main CRM web.config file. By default it is 8Mb which doesn't impact the System Setting below. However if you increase the Maximum File size above the maxRequestLength you will have problems.
There are many examples on the web that show something like the following which pretty well removes any size constraints from the web.config.
Save the web.config and restart IIS.
For MS CRM 4.0 that just leaves adjusting the Maximum file size in System Settings with default of 5,120 Kb shown below to something higher but less than the maxRequestLength.
Go to Settings -> administrator -> system settings -> email tab -> Exterem down you will get it.