The story is published regardless of the value of "status"

I am new to Drupal, and a PHP newb as well, so take my findings with a grain of salt...

I was having the same problem that soxadmin1 reported. I spent a couple of hours working on it and traced it to the node.module node_submit() function called from the mailhandler.module mailhandler_node_submit() function. The user access when node_submit() is called is not 'administer nodes' and that forces node_submit() to apply the defaults for status, etc. which overwrites the values set in mailhandler.module. I hacked mailhandle.module by adding a call to mailhandler_switch_user() before and after the node_submit() call like this:

mailhandler_switch_user();
$node = node_submit($node);
mailhandler_switch_user();

This solved the problem for me. Of course I'm just a newb so I don't know what unwanted side effects that hack might cause. And perhaps this could have been solved with a configuration change - but I was unable to find anything relevant. I would appreciate a little guidance if I have gone off the rails here. Thanks.