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I thought someone had this problem recently...was searching for another issue and came across this....

OL2002: Unable to Send Mail By Using Yahoo After Upgrading to Outlook 2002
The information in this article applies to:
Microsoft Outlook 2002, when used with:
the operating system: Microsoft Windows 98 Second Edition
Microsoft Outlook 98, version 8.5, when used with:
the operating system: Microsoft Windows 98 Second Edition
SYMPTOMS
After you upgrade from Outlook 98 to Outlook 2002, if you send mail through a Yahoo Post Office Protocol version 3 (POP3) mail server, you may receive one of the following error messages:

Task 'pop.mail.yahoo.com - Sending and Receiving' reported error (0x800CCC0F): 'The connection to the server was interrupted. If this problem continues, contact your server administrator or Internet service Provider (ISP).'
-or-


Task 'Yahoo - Sending' reported error (0x800CCC78): 'Unable to send the message. Please verify the email address in your account properties. The server responded: 521 yahoo.com closing transmission channel. You must be pop-authenticated before you can use this smtp server, and you must use your yahoo mail address for the Sender/From field.'
CAUSE
This issue occurs because before you can send e-mail by using Yahoo, Yahoo requires that you be logged on to and authenticated by the Yahoo Simple Mail Transfer Protocol (SMTP) mail server.
RESOLUTION
To resolve this issue, modify some of the settings in your Yahoo mail account:
On the Tools menu, click E-mail Accounts.
If View or change existing e-mail accounts is not already selected, click View or change existing e-mail accounts, and then click Next.
Click the Yahoo mail account, and then click Change.
In the Internet E-mail Settings (POP3) dialog box, click More Settings.
Click to select the My outgoing server (SMTP) requires authentication check box.
Ensure that Log on to incoming mail server before sending mail is selected.
Click OK, click Next, and then click Finish.
Quit and restart Outlook before you send mail.
STATUS
Microsoft has confirmed this to be a problem in the Microsoft products that are listed at the beginning of this article.
MORE INFORMATION
Before a Yahoo user can send mail, Yahoo requires that the user be authenticated by the Yahoo SMTP mail server. This prevents unauthorized use of the SMTP gateway by unscrupulous or malicious mail users.

The third-party products discussed in this article are manufactured by vendors independent of Microsoft; we make no warranty, implied or otherwise, regarding these products' performance or reliability.
 
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