Sorry I don't know enough information about DreamServers to be able to help you.
Dream[color=#CC0000]host[/color] does not offer SMTP services therefore I'm not familiar with their setup.
Have you tried unchecking the [color=#CC0000]Authentication Required[/color] dialogue box? This is not a software specific problem, therefore I wouldn't waste my time reloading the software.
Try sending a message to Tech Support from your Web Panel.
Did any instructions on how to set up email come with your Dreamserver account? Did they specify that you had to use Authenticated SMTP? Are you behind a firewall?