I have tried turning on 'the server requires authentication' and email still doesn't go through. I've tried user accounts, the administrator account and users accounts with administrative rights.

To Andrew's question above...Adagio returns "There was an error during the email test procedure".

Also, the Email method is set to direct, Server requires authentication is checked and account name and password are filled in.

Still, if I send to an internal address, it works fine. When I try sending to an external address, I get the error above.