Generally yes. Assuming that 'configured properly' applies of course (I'm not going to get into the subtleties of configuring a server securely).
Also, you rightly focused the question to those 2 parties, and correctly noted the fact that other aspects might cause security issues / information leakage (e.g. if the client or server are somehow exposed or compromised). If the message was sent by one of the parties to an external email address on a different server, then the same level of protection is not likely to apply. (This concern might also apply if one or both parties set a forwarder or auto-reply)
However, one major point that is missing from your question, is how the email later gets delivered to the recipients. SMTP handles sending emails. A different protocol is usually used for picking up email from the mailbox. Typically POP3 or IMAP4, but there are other possibilities of course (webmail, Unix mailboxes etc). Is this part of the communication also configured properly and secured in the same way?
In addition, confidentiality of the communication may not be the only concern. In some cases, the parties want to validate the origin of the message, and that the contents hasn't been tampered with. SSL/TLS on the SMTP channel aids in protecting against it, but it might not be sufficient in certain situations. Are those two parties trustworthy? do they trust each other?? I guess there are many hypothetical questions and directions to look at this, but on the pure technical side, of whether the communication layer between both clients and the server are protected from eavesdropping, I think you've made a fair assessment.