Qmail smtp auth failed

[brendon2020]

i've finally got around to setting up qmail. I followed qmailrocks.org tutorial for my debian server. So far everything seems to be working okay except for smtp authorization.

Users without authorization can send to anyone on my domain. So [email protected] can send to [email protected] no problems. I've been told this is okay, is it? But if i go into the clients thunderbird/outlook/outlook express and enable smtp auth with the same user/pass combo they use to login for their pop3 account; and it fails everytime (just keeps prompting for a new pass). Also i tried enabled TLS, the client even prompts for the certificate you click okay but the pass still fails. I've read somewhere that some people had it where it will pass on the 2nd or 3rd try. I've tried many times and still no luck.

I can email from my gmail/hotmail/comcast email to my domain and they receive it just fine. I'm going to try include some as much info from logs as possible.
/var/log/qmail/qmail-send/current

@4000000043a09b252218dfcc end msg 1410211
@4000000043a09d7725be8b54 new msg 1410182
@4000000043a09d7725bea6ac info msg 1410182: bytes 5721 from <aaangfaxbunnb3_atyx04hcaiyn1bdjtsoj2z2vqbi2xux@neighborsandfriends.b.tep1.com> qp 32286 uid 1012
@4000000043a09d7725fa501c starting delivery 15: msg 1410182 to local [email][email protected][/email]
@4000000043a09d7725fa6b74 status: local 1/10 remote 0/120
@4000000043a09d77268adc04 delivery 15: failure: Sorry,_no_mailbox_here_by_that_name._vpopmail_(#5.1.1)/
@4000000043a09d77268af75c status: local 0/10 remote 0/120
@4000000043a09d772729eac4 bounce msg 1410182 qp 32291
@4000000043a09d772729fe4c end msg 1410182
@4000000043a09d77272bf634 new msg 1410211
@4000000043a09d77272cadcc info msg 1410211: bytes 6394 from <> qp 32291 uid 1009
@4000000043a09d7727740f3c starting delivery 16: msg 1410211 to remote [email]aaangfaxbunnb3_atyx04hcaiyn1bdjtsoj2z2vqbi2xux@neighborsandfriends.b.tep1.com[/email]
@4000000043a09d772774fd84 status: local 0/10 remote 1/120
@4000000043a09d78178f6134 delivery 16: success: 65.77.104.141_accepted_message./Remote_host_said:_250_ok_1134621046_qp_4683/
@4000000043a09d78178f7c8c status: local 0/10 remote 0/120
@4000000043a09d78178f93fc end msg 1410211
@4000000043a09e9e14e5ad94 starting delivery 17: msg 1410208 to remote [email][email protected][/email]
@4000000043a09e9e14e5ccd4 status: local 0/10 remote 1/120
@4000000043a09e9e24c62194 delivery 17: deferral: Connected_to_209.51.220.26_but_connection_died._(#4.4.2)/
@4000000043a09e9e24c63cec status: local 0/10 remote 0/120

/var/log/qmail/qmail-smtpd/current

@4000000043a080f5245e7684 tcpserver: end 26453 status 0
@4000000043a080f5245e91dc tcpserver: status: 0/30
@4000000043a0810f17e5551c tcpserver: status: 0/30
@4000000043a0816038e45a9c tcpserver: status: 1/30
@4000000043a0816038e475f4 tcpserver: pid 26538 from 66.176.112.43
@4000000043a0816038e938b4 tcpserver: ok 26538 mail.hawtmail.com:72.232.19.50:25 c-66-176-112-43.hsd1.fl.comcast.net:66.176.112.43::51598
@4000000043a08166377b1a24 tcpserver: end 26538 status 256
@4000000043a08166377b3194 tcpserver: status: 0/30
@4000000043a081cd1d5c6d14 tcpserver: status: 1/30
@4000000043a081cd1d5c886c tcpserver: pid 26573 from 69.6.10.77
@4000000043a081cd1d6060cc tcpserver: ok 26573 mail.hawtmail.com:72.232.19.50:25 077.mx02.net:69.6.10.77::3227
@4000000043a081cd30697c6c Undefined subroutine &main::minidebug called at /var/qmail/bin/qmail-scanner-queue.pl line 569.
@4000000043a081ce3a07fec4 tcpserver: end 26573 status 0
@4000000043a081ce3a081a1c tcpserver: status: 0/30
@4000000043a082d81f23b7c4 tcpserver: status: 1/30
@4000000043a082d81f23d704 tcpserver: pid 26593 from 72.29.5.190
@4000000043a082ee3122f8cc tcpserver: ok 26593 mail.hawtmail.com:72.232.19.50:25 s6.firesmrtdls.com:72.29.5.190::59522
@4000000043a082ef1b7d5c74 Undefined subroutine &main::minidebug called at /var/qmail/bin/qmail-scanner-queue.pl line 569.
@4000000043a082f900673004 tcpserver: end 26593 status 0
@4000000043a082f900674f44 tcpserver: status: 0/30

/var/qmail/supervise/qmail-smtpd/run

#!/bin/sh
QMAILQUEUE="/var/qmail/bin/qmail-scanner-queue.pl" ; export QMAILQUEUE
QMAILDUID=`id -u vpopmail`
NOFILESGID=`id -g vpopmail`
MAXSMTPD=`cat /var/qmail/control/concurrencyincoming`
LOCAL=`head -1 /var/qmail/control/me`
if [ -z "$QMAILDUID" -o -z "$NOFILESGID" -o -z "$MAXSMTPD" -o -z "$LOCAL" ]; then
echo QMAILDUID, NOFILESGID, MAXSMTPD, or LOCAL is unset in
echo /var/qmail/supervise/qmail-smtpd/run
exit 1
fi
if [ ! -f /var/qmail/control/rcpthosts ]; then
echo "No /var/qmail/control/rcpthosts!"
echo "Refusing to start SMTP listener because it'll create an open relay"
exit 1
fi
exec /usr/local/bin/softlimit -m 100000000 \
/usr/local/bin/tcpserver -v -R -l "$LOCAL" -x /etc/tcp.smtp.cdb -c "$MAXSMTPD" \
-u "$QMAILDUID" -g "$NOFILESGID" 72.232.19.50 25 smtp \
/var/qmail/bin/qmail-smtpd mail.mydomain.com \

Btw i added mail.mydomain.com, my actual domain is in there.

Here is a telnet session with info about the server.

telnet mail.mydomain.com 25
Trying 72.232.19.50...
Connected to mail.mydomain.com.
Escape character is '^]'.
220 mail.mydomain.com ESMTP
EHLO ANYTHING
250-mail.mydomain.com
250-AUTH LOGIN CRAM-MD5 PLAIN
250-AUTH=LOGIN CRAM-MD5 PLAIN
250-STARTTLS
250-PIPELINING
250 8BITMIME

Any advice would be appreciated. Thanks in advance.