I have a bit more info on this if it's helpful. It seems to be tied to portal account creation. If "Portal?" is set to N it works fine. If you change their email address to anything but the original, tell it to replace the portal account, and then switch it back it also works fine.
I currently have a parent with this issue. We just opened Parent Data Confirmation and she was unable to edit a contact. She received a message that said, "Failure sending mail."
Any clue on how to solve this?
As of the 7/15 update, users are unable to save a contact record when adding or editing an email address on the Contacts page. This can affect new or existing Contacts.
We are currently investigating the issue and will post another update soon.
UPDATE: A fix for this issue was released with the 7/16/2021 update. Here are the Revision Notes:
Contacts - Some Contact records would not save when adding them to the Portal with an existing email address, fixed.