This may help....
1. Click Tools/Accounts and double-click the account that is giving you the error
2. Click "More Settings" button then "Outgoing Server" tab at the top
3. Put a check in "My outgoing server (SMTP) requires authentication" AND put a check in "Log onto incoming mail server before sending mail"
DO NOT PUT YOUR USERNAME AND PW FOR YOUR ISP IN THE CREDENTIALS FIELDS.
4. Click the "Ok" button to take you back to the "Change Email Account" properties box and then click the "Test Account Settings.." button.