You may receive this error in your email client settings at some point. In Outlook, this is a bug and can usually be resolved by restarting your email client and making sure you have SMTP authentication enabled.
This is not a server problem and is caused by a misconfigured email client, ISP's blocking access to port 25 and using port 26 instead or a DNS problem with your ISP.
To confirm that the mail server is online and responding, you can perform the following:
Step 1: From the 'Start' button click 'Run'.
Step 2: Type in 'telnet yourdomain.com 25'.
Step 3: You should receive something to the effect of:
220-server.dnsprotect.com ESMTP Exim x.xx #1 day, xx Month 2004 time.
220-We do not authorize the use of this system to transport unsolicited,
220 and/or bulk e-mail.