I FOUND THIS ANSWERED MY QUESTION:
This is a common issue with any IMAP account when setting up through Mac Mail. If you are able to receive messages BUT NOT SEND (GMail, Hotmail, Live, etc), the answer is simple 🙂
Click Mail > Preferences > Accounts (select yours) > (select) Account Information > Click the Drop Down (smtp.gmail.com, smtp.live.com, etc), select Edit Server List > Advanced > Click the Drop Down Box under AUTHENTICATION, select PASSWORD
Enter your FULL email and password, and the checkbox for default ports and SSL should be checked.
Basically, you skipped the authentication step when setting up the outgoing emails, so you're sending an email that connects to a server with no credentials, hence the "unable to send" message. Hope this helps someone who is new to Mac OS!