John,
Is it possible the timeout is due to an unnecessary attempt to further authenticate the SMTP server? Please consider the following:
I am pasting in some general comments, I often offer, to explain all the questions I ask about server authentication -- it may help clarify how you are attempting to authenticate the SMTP to use. If you give me a link to the support document for this from your provider, I can sometimes pick up subtle things in the instructions that you might not.
There are some ISP who even provide two different SMTPs -- one for use when at your home venue, and another when traveling. The one for use at home is not authenticated by password, but by the IP address of the modem, and it is further pointed out that the second one (authenticated by password) will NOT work when at home -- this is platform and mail client universal, and not limited to Macs and Mail. The one with Password Authentication is needed when on other networks, such as in hotels and cafes. But not all practicing this form of home system authentication are so explicit in their description.
When authentication of the SMTP is what is called POP3 before SMTP (or SMTP after POP3), no user name is appended to the name of the SMTP, and some providers will explicitly direct that SMTP authentication be set to None, but others may be less explicit, depending instead on samples of setting up an account in a common mail client such as Outlook Express and as you are seeing with Mozilla (Thunderbird?). There are not exact parallels in the dialogues for this between every mail client and Mail, but it can be interpreted, with care. In the SMTP after POP3 type of authentication, the redundant step of separate authentication of the SMTP apparently times out and fails, rather than explicitly being refused access.
When the name of the incoming and outgoing servers seem the same, it can often be that SMTP after POP3 authentication is being used, but not always.
This can also result with cable broadband providers, who can authenticate you for sending, based upon the IP address in the modem they provided you.
Please clarify your thoughts and need to authenticate the SMTP you are using as the Outgoing Server. Perhaps you should test with None as the method of authenticating the Outgoing server.
Ernie