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15:52:19 [206.196.28.228][21853809] rsp: 220 chameleonhosting.com  
15:52:19 [206.196.28.228][21853809] connected at 2/20/2008 3:52:19 PM
15:52:19 [206.196.28.228][21853809] cmd: EHLO DED1034
15:52:19 [206.196.28.228][21853809] rsp: 250-chameleonhosting.com Hello [206.196.28.228] 250-SIZE 31457280 250-AUTH LOGIN CRAM-MD5 250 OK
15:52:19 [206.196.28.228][21853809] cmd: AUTH login c2FsZXNAaW5mb2Rlay5jb20=
15:52:19 [206.196.28.228][21853809] rsp: 334 UGFzc3dvcmQ6
15:52:19 [206.196.28.228][21853809] rsp: 535 Authentication failed
15:52:19 [206.196.28.228][21853809] cmd: MAIL FROM:<account@localdomain.com>
15:52:19 [206.196.28.228][21853809] rsp: 250 OK <account@localdomain.com> Sender ok
15:52:19 [206.196.28.228][21853809] cmd: RCPT TO:<account@remotedomain.com>
15:52:19 [206.196.28.228][21853809] rsp: 550 Authentication is required for relay
15:52:19 [206.196.28.228][21853809] disconnected at 2/20/2008 3:52:19 PM

I have two servers. I am running a web process on one (Able Commerce web site) and the mail server on the other. The Able Commerce site tries to send the email to the account@remotedomain.com But you can see above what errors I get. The login information is correct in Able Commerce's settings.

Is this a SmarterMail bug, or an Able Commerce bug?

The authentication that you are passing is failing.

 You can tell here:

15:52:19 [206.196.28.228][21853809] cmd: AUTH login c2FsZXNAaW5mb2Rlay5jb20=
15:52:19 [206.196.28.228][21853809] rsp: 334 UGFzc3dvcmQ6
15:52:19 [206.196.28.228][21853809] rsp: 535 Authentication failed

 Make sure that you are using the correct email address (must be the full email address) and password.