This error usually means that you are not using SMTP authentication. Please make sure to activate SMTP authentication in your email software.
If you are using Outlook express, you can activate SMTP authentication by following these steps:
1. Menu : Tools : Accounts
2. Select Mail tab and highlight the account and click on Properties
3. Select Servers tab
4. At the bottom of it, you can find "My server requires authentication", select it
5. Press Apply, OK and Close.
If you are using MS Outlook, follow these steps:
1. Menu: Tools : Email Accounts
2. View of change existing e-email accounts, press Next
3. Hightlight the email account, and click the button "Change..."
4. Click the button "More Settings ..."
5. Select the "Outgoing Server" tab and select the "My outgoing server (SMTP) requires authentication
Save these settings, and then try again.