I have removed the requirement for encryption to expose the authentication
problem. Please notice that Outlook reports:

2009.11.08 14:04:32 SMTP (smtp.tryx.org): Authorizing to server
2009.11.08 14:04:32 SMTP (smtp.tryx.org): Authorized to host


And sendmail reports:

Nov 8 14:11:10 trax sendmail[10829]: nA8MBAgg010829: -- MAIL FROM:

Nov 8 14:11:10 trax sendmail[10829]: nA8MBAgg010829: --- 530 5.7.0
Authentication required


And I get a pop-up window from Outlook reporting:

Task - Sending' reported error (0x800CCC78) : 'Unable to send
the
message. Please verufy the e-mail address in your account properties. The
server
responded: 530 5.7.0 Authentication required'