The reason for this error is that your email server requires SMTP Authentication to send outgoing mail.  In order to resolve this issue you will need to configure your email client (Outlook, Outlook Express, Eudora, Thunderbird, etc) so that you are an authenticated user.

For Outlook do the following:

1. Click on the Tools menu in Outlook2007
2. Click on Email Accounts
3. Click View or Change existing e-mail accounts
4. Click Next
5. Highlight Your email account
6. Click Change
7. Click More Settings
8. Click Outgoing Server tab
9. Check the "My outgoing server (SMTP) requires authentication" must be checked
   
10. Make sure that "Use same setting as my incoming mail server" is selected
11. Click OK
12. Click Next
13. Click Finish and you are done

For Outlook Express do the following:

1. Click on the Tools menu in Outlook Express
2. Click on Accounts
3. Hightlight an email account and click Properties
4. Click the Server tab
5. Under the Outgoing Mail Server, check the "My server requires authentication" check box
6. Click the Settings button
7. Make sure that "Use same setting as my incoming mail server' is selected
8. Click Apply
9. Click OK
10. Click Close and you are done