The difference between outbox and sent is that messages in the outbox are in the process of being sent, but have not yet been sent. If you have a notebook, for instance, and you write an e-mail while you're on an airplane, and have no net connection, then it goes to the outbox, until you get a connection, at which time it goes to Sent. I think you can also set it up so that messages do not get sent automatically, but queue in the outbox until you trigger a send; some people like this because they have a sort of "oh, wait" buffer. 🙂
The IMAP server is basically the server that provides incoming mail, and the SMTP one is the one that takes your outgoing mail. If you must enter a password for your SMTP, then what you must do is, in the options for the Outgoing Mail Server, change the pull-down that says Authentication from "None" to the appropriate setting for AOL (probably "Password"). Also, if they require a secure port, change that too. When you change the authentication type, it will let you give the password. 🙂
Does that make sense / help? 🙂