SMTP authentication on MAC

I’ve got couple of MACS (OS9,Outlook Express5) and i’m trying to use Authenticated SMTP to send mail.
My server is WIn2K with SLMail2.7 installed.

WHen authentication is not enabled, things work fine but not when enabled. I’ve checked the tick boxes on outlook and confirmed the passwords. Obviosly i want to stop people from spamming from my mail server. Any Ideas?