This policy setting controls how forms that are compatible with InfoPath 2003 are sent by e-mail. If you enable this policy ...

This policy setting controls how forms that are compatible with InfoPath 2003 are sent by e-mail.
      
      If you enable this policy setting, InfoPath 2010 cannot send forms that are compatible with InfoPath 2003 as integrated e-mail forms. These forms cannot be distributed using e-mail until they are upgraded to InfoPath 2010 forms.
      
      If you disable or do not configure this policy setting, InfoPath sends all forms via e-mail using InfoPath e-mail forms integration, including forms that were created using the InfoPath 2003 file format.