[Exim] Authentication question using 3.35

Hello Good People,

I am attempting to have my users authenticate remotely to use my Exim 3.35
machine as their outgoing mail server. I will be upgrading to 4.2 soon, but the
quicker I can get the authentication going, the better. The /etc/exim/passwd
file is a copy of the system's /etc/passwd file.

I am experiencing problems during the authentication process when Netscape
requests a password. I enter the password and it keeps requesting a password.
During a tail -f on /var/log/exim/rejectlog and I get these entries when I am
submitting a password:

2003-08-26 13:01:56 Authentication failed for (surfesa.org) [151.214.18.254]:
535 Incorrect authentication data
------------------------------------------------------------------------------
2003-08-26 13:02:00 Authentication failed for (surfesa.org) [151.214.18.254]:
535 Incorrect authentication data
------------------------------------------------------------------------------

Any help/advice on how to implement remote authentication would be greatly
appreciated. The a copy of the bottom of the exim.conf file is:

######################################################################
#                   AUTHENTICATION CONFIGURATION                     #
######################################################################

# Look in the documentation (in package exim-doc or exim-doc-html for
# information on how to set up authenticated connections.

# The examples below are for server side authentication; they allow two
# styles of plain-text authentication against an /etc/exim/passwd file
# which should have user IDs in the first column and crypted passwords
# in the second.

plain:
driver = plaintext
public_name = PLAIN
server_condition = "${if
crypteq{$2}{${extract{1}{:}{${lookup{$1}lsearch{/etc/exim/passwd}{$value}{*:*}}}}}{1}{0}}"
server_set_id = $1

login:
driver = plaintext
public_name = LOGIN
server_prompts = "Username:: : Password::"
server_condition = "${if
crypteq{$2}{${extract{1}{:}{${lookup{$1}lsearch{/etc/exim/passwd}{$value}{*:*}}}}}{1}{0}}"
server_set_id = $1

# These examples below are the equivalent for client side authentication.
# They assume that you only use client side authentication to connect to
# one host (such as a smarthost at your ISP), or else use the same user
# name and password everywhere

plain:
driver = plaintext
public_name = PLAIN
client_send = "^username^password"

login:
driver = plaintext
public_name = LOGIN
client_send = ": username : password"

cram_md5:
driver = cram_md5
public_name = CRAM-MD5
client_name = username
client_secret = password

# End of Exim configuration
file