No need to feel 'stupid' or 'silly'. Lots of people are having the exact same problem, which tells me that there is a problem with the software, not with the people using it.
The next version will have a fix in it to prevent anyone from being able to login as 'root'.
Actually, if all you are looking for is a mail, ftp, web server and have no intentions of looking under the hood, you can use e-smith for years and still be 'new' at linux. Done correctly, all you need to know is basic networking and how to use a web browser. The goal behind e-smith is to provide a seamless introduction to linux, if you want to learn more ... its all under the covers just waiting for you :>
Hope you enjoy the product.
Jay