If you go to the online help while viewing the SMTP proxy page there is a subsection of help called SPAM Authentication. The paragraph then discusses SMTP Authentication. Excerpt:
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:: Spam Authentication ::
If you enable SMTP authentication you can now specify if TLS encrypted connections should be required. TLS for incoming connections is always turned on and the proxy will use strong encryption automatically if the remote host supports this feature too. If disabled, users authenticating themselves transmit their passwords in clear text. Normal SMTP is unencrypted and can easily be eavesdropped on by third parties, so it is recommended to turn on this function.
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-Greg
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