Here's the snippet from the error log. The SMTP server requests the password due to the use of LOGIN type authentication mode. The Chilkat control does not send it resulting in a failure to send the message:
250 OK login_method: LOGIN auth_login_1: SmtpCmdSent: AUTH LOGIN<CRLF> SmtpCmdResp: 334 VXNlcm5hbWU6 SmtpCmdSent: dml0YWxpZGE=<CRLF> SmtpCmdResp: 334 UGFzc3dvcmQ6 SmtpCmdSent: ************<CRLF> SmtpCmdResp: 535 5.0.0 Authentication Failed 535 5.0.0 Authentication Failed Failed to get response to login password ConnectionLog: (leaveContext) (leaveContext) Failed to login using LOGIN method (leaveContext)
This is not a bug, but a simple invalid login/password failure. Your application simply passed an invalid login/password to the SMTP server, and the SMTP server responded with an "Authentication Failed".