I was having the same thing. The smtp not recognizing the password as I tried to send. But it was the Pop account that was at fault. After repeated attempts to Repair Keychain, re-enter information in Mail Preferences and Keychain I deleted the Pop account in Mail Preferences and did a new one. It took about 5 seconds as Mail found my old account's information and created a new one. Immediately, I received 5 messages. Then the smtp account cleared up and sent my message...
So this looked promising but when I went to delete the account it said that it would delete all my mail for that account from my computer and i dont think i want to do that, right?