Resolution
If you have the Parallels Plesk Panel (PPP) server set as the outgoing SMTP server in the mail account preferences of your mail client and you receive this error when trying to send a message to an external recipient, it means that the server requires authorization and that you did not authorize before sending. Make sure that SMTP authorization support is enabled in your mail client preferences. For example, in Outlook, check authorization properties in Tools > Accounts > Mail > Mail Account > Properties > Servers > Outgoing Mail Server > Settings. There should be a checkbox option that says "server requires authorization." Use the full user name for authorization, i.e., "name@domain.com" (not just "'name").If POP3 authorization is enabled in PPP, then you may authorize with POP3 (simply check for new mail) to the server first, and then you will be able to send mail within the "POP3 lock time" that is set at the Server > Mail page in Plesk Control Panel.
If you get a bounced message with the same error when sending mail to a domain hosted on the Parallels Plesk Panel server, then make sure that the mail service for this domain is enabled and that the domain name is listed in the $QMAIL_ROOT_D/control/virtualdomains and $QMAIL_ROOT_D/control/rcpthosts files.
If not, use the $PRODUCT_ROOT_D/admin/sbin/mchk utility to rebuild Qmail configuration.