Hi people.
I've found a working solution, based on the solution in this post.
Tried lots of things, but problem was indeed a crippled plist file.
What solved it was opening the Accounts.plist file situated in:
Users > [username] > Library > Mail > V2 > MailData.
Then what I did was replace the <dict> to </dict> code snippet in this from a WORKING plist file from another machine.
It was this part, and this was the working version here.
Mind you, this is for an SMTP server that should be working with normal password OR TLS authentication with SSL but eventually Apple made it into a MD5 Challenge-Response with SSL on port 587 and that worked.
Replaced my OUTGOINGMAILSERVER below and my EMAILADDRESS and the STRING with these words <
<dict>
<key>AccountName</key>
<string>OUTGOINGMAILSERVER HERE</string>
<key>AccountType</key>
<string>SMTPAccount</string>
<key>AuthenticationScheme</key>
<string>CRAM-MD5</string>
<key>CanonicalEmailAddress</key>
<string>EMAILADDRESS</string>
<key>ConfigureDynamically</key>
<true/>
<key>Hostname</key>
<string>OUTGOINGMAILSERVER</string>
<key>MaxMessageBytes</key>
<integer>100000000</integer>
<key>PortNumber</key>
<integer>587</integer>
<key>SSLEnabled</key>
<string>YES</string>
<key>SecurityLayerType</key>
<integer>2</integer>
<key>ShouldUseAuthentication</key>
<string>YES</string>
<key>UserAllowsInsecureAuthentication</key>
<false/>
<key>Username</key>
<string>EMAILADDRESS</string>
<key>uniqueId</key>
<string>THEREWASASTRINGHERE</string>
</dict>