authentication failure [SMTP: Invalid response code received from server (code: 535, response: 5.7.8 Error: authentication failed: another step is needed in authentication)]
This error is caused by your SMTP server - it uses different type of authentication method.
By default plain method is used in our application.
You can allow on your SMTP server PLAIN authentication method or setup another authentication method in PAP4 in Configuration> Mail accounts> SMTP settings - you can choose authentication method which should be used during authentication to SMTP server (consult this with your server administrator).
To explain it more, login to SMTP server can be authenticated by methods: CRAM-MD5, DIGEST-MD5, LOGIN, PLAIN