I've installed the windows server 2003 pop3 service on my server to have some basic send/receive email facility on a couple of domains.

I'm using encrypted password authentication (not local or AD) because I need the same username on different domains.

Followed the wizard and as far as I can see all is set up to correspond to numerous sites on google showing how to configure it.

However, when using Outlook, I can connect to the server and receive email, I can send email to the box from an external email address, but when I try to send using the email on the server I get an authentication error.

In short I can send email to, read email from, but not send email USING the email account.

Is there anything obvious that comes to mind that I may have missed?

pop3 is just for receiving mail you need an smtp server to be able to send. The only thing is if you turn that on most likely it's going to get spammed like crazy and your ip will be black listed. I wouldn't use windows services to handle email use something like EmailArchitect Email