SMTP: Invalid response code received from server (code: 501, response: 5.5.4 cannot decode AUTH parameter)
it looks like there is a problem with passing the user name and password to the smtp server.
In the Universal Email settings for the SMTP server, did you check the box to pass authentication?
Are you sure the username and password entered are correct for making a connection to the smtp server?
I have found a couple of posts on google where the "saslauthd" service on the server needed to be restarted, try having the host restart that service.