This is doing my head in .. I have setup an Exchange server which seems to be working just fine.
When user try to setup IMAP though, the SMTP login is not accepted and is rejected with an unknown username / password - but they can use the same credentials on OWA.
They seem to be able to read mails, just not sending any ... I have used both plain text login types with no luck

(connecting from Outlook 2010 btw.)
Edit:
When restarting the IMAP service I can see the following error in the event log:

Google doesn't return much on that either