There is another thread about this and here are the two work arounds that have been making mail send:
tiger8395
Go to the "Mail, Contacts, Calendars" settings panel under "Settings." Click on the "AOL" account. Click on "Account". Under "Outgoing Mail Server" click on "SMTP". Under "Primary Server" it says "smtp.aol.com" and is probably set to "On". Change this setting to "Off". Then click on "Add Server..." under "Other SMTP Servers". Add "smtp.aol.com" as the Host Name, Your AOL account as the user name (without "@aol.com"), and your AOL password. Your outgoing mail should now work. I believe the problem is that on my wife's phone, "@aol.com" is somehow getting added to the sendmail request under the default settings for the Primary SMTP server. This bypasses that problem.
and
from horanel (this is the one that worked for me)
I tried Tiger's info and didn't work but here's the difference:
Don't turn OFF the primary server
Add server smtp.aol.com turnON
LEAVE BOTH ON
DO add user name (without @aol.com) on new server under optional
DO add password,
under authentication, make sure password is ON
NOW IT WORKS!! been screwing with this all day --- rec'd all msges in my outbox. thx all