Well, the problem is that Postfix is having trouble talking to the saslauthd daemon. I fully agree that you're typing in your credentials correctly.
Okay, the next step --
If you go to the following post, you'll see someone who had your exact problem, and he posted his steps to resolve it. What happens if you follow step #1 (the "tricky" part) and step #2 (restarting postfix and saslauthd):
http://www.virtualmin.com/forums/help-home-for-newbies/re:unable-to-send-mail-with-postfix-use-mail-
clien.html#15785Again, if that looks like more than you're comfortable doing, just yell and I'd be happy to drop in and run that myself!
There's a few folks that helped though, and I suspect it'll do the trick for you.
-Eric