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First, the servers require authentication. This authentication consists of the full username (e.g. firstname.lastname@example.org) and password. Most modern MTA's will authenticate to a relay host (also known as a smart host). The Yahoo servers only accept basic authentication - PLAIN(cleartext) or LOGIN(hashed account info).
Secondly, Yahoo sends MTA's to a "fake" mail server (nomail.yahoo.com) via a false MX record. This may be to prevent the spread of worms and viruses with built-in SMTP servers or may be to prevent folks from running MTA's. Regardless, to prevent the lookup and use of this false MX record, most MTA's require [square brackets] around the host or IP address(Microsoft).
Although Yahoo's FAQ says the From: field requires your email@example.com address, this is not true. You can have firstname.lastname@example.org in the From: field.
Examples of necessary changes for MTA's:
Postfix - Use a current version that supports SASL (not sure but TLS can't hurt).
Add the following lines to the main.cf configuration file -
smtp_sasl_auth_enable = yes
smtp_sasl_security_options = noanonymous
smtp_sasl_password_maps = hash:/path/to/local/postfix/saslpasswd
change the following line to point to the new smtp relay host (notice the brackets) - relayhost = [smtp.ameritech.yahoo.com]
Create a the file /path/to/local/postfix/saslpasswd with your favorite editor and place the following line at the top of the file (notice that the name differs from the smtp.ameritech.yahoo.com, it is just an alias to the actual name listed) - smtp-sbc.mail.yahoo.com(insert space or tab)email@example.com:password
Then run the command "postmap /path/to/local/postfix/saslpasswd". Finally, do a "postfix reload" so the changes take effect.
Microsoft IIS SMTP Server - Select the option under route domain to forward all mail to smart host. Enter the IP address of the host in brackets to prevent the MX lookup [22.214.171.124].
Select Basic authentication on the Outbound authentication tab and enter your account info.
Sendmail - Not many details available. It is reported that Sendmail 8.11.6 works with sendmail-tls using the smtp-auth features.
smtp-sbc.mail.yahoo.com(insert space or tab)firstname.lastname@example.org:password
SBC changed the reverse lookup on the hostname in late September 2003. Users experiencing difficulty sending messages and seeing authentication errors in their MTA logs likely have to update their saslpasswd file to include the new hostname - smtp-sbc.mail.yahoo.com.
Also, see an excellent writeup on how to use Smarthost to make the decisions on where to send outgoing mail, especially to other Ameritech.net and SBCGlobal.net domains. It was written by forum member efflandt.