The system email is just a setting in configuration that disabled email for the entire site - if any email is getting out, it's safe to assume that's not the problem.
Sounds like your sender name and email is fine, then - if that were the problem, I'd expect the problem to come up with all emails.
The subject line does look okay to me at a glance .
Honestly, if I were having this problem, I'd start just throwing a little debugging code in there to spit out what the code is seeing for the sender name, email, subject line, etc at the point in the code when it's throwing the exception. If you're not familiar with Magento's core code and would rather not do that, though, hopefully someone else here has a little more insight than I do. I haven't had much trouble with email in Magento, so I haven't really done much with it.