You got this error on Mac OX X (Mavericks in my case) when send email. You have configured your smtp mail server (smpt.yourdomain.com) and the check shows that it is connecting fine without password. The problem here is you need to enable password authentication which be default may be disabled.
Go to your SMTP Server Lists (double tab on concerned account, click edit “account”, click “Outgoing Mail Server(SMPT)” drop box and select Edit SMTP Server List”). select your server and choose password in authentication. Supply your username as follows
That should fix it for you.