You are using the formmail script provided by WestHost it looks like. I don't think this script can send in HTML. It would be on the program side and not in Outlook that you would need to set this up. One option could be to use different program.
I think the php version of this program can send in HTML.
http://www.tectite.com/formmailpage.php Their forum has a post on how to configure and set up the script to do this.
http://www.tectite.com/vbforums/showthread.php?t=104
The nms Project has an alternative called TFMail that might work for you. It is based of the original formmail but has better security and added features.
http://nms-cgi.sourceforge.net/scripts.shtml Scroll down and you'll see the link to download it. The documentation for the program is in the script itself. There is also a readme file in the zip file.