Net/SMTP.php has an error in the Auth code.

If you set $params['auth'] = true; then the script never returns.  

The problem exists in the following two lines:

*Line 138*
if (PEAR::isError($this->socket->write(base64_encode($uid) . "\n"))) { return new PEAR_Error('write to socket failed'); }

*Line 141*
if (PEAR::isError($this->socket->write(base64_encode($uid) . "\n"))) { return new PEAR_Error('write to socket failed'); }

Notice the \n instead of \r\n. This causes the SMTP server to hang waiting for a valid line termination response.

SOLUTION:

Change \n to \r\n and AUTH works fine.