[Dovecot] Dovecot SASL for postfix: Client host rejected: when relaying using POP mail client

[Nad]

Hi everyone

I have setup an ISP style mail system using postfix, dovecot, squirrelmail 
and mysql on ubuntu server 7.04. Everything seems to be working fine with 
sending recieving emails but relaying on submission service (port 587). I 
want to allow any client to be able to relay as long as they AUTH using 
dovecot SASL and are valid users regardless of what IP/host they come in 
from. I have a feeling that the submission service is not able to make use 
of dovecot sasl-auth. Here is what I have in my master.cf to enable 
submission service:

submission inet n       -       -       -       -       smtpd
  -o smtpd_enforce_tls=no
  -o smtpd_sasl_auth_enable=yes
  -o smtpd_client_restrictions=permit_sasl_authenticated,reject

My main.cf file looks like this:

queue_directory = /var/spool/postfix
command_directory = /usr/sbin
daemon_directory = /usr/lib/postfix
mail_owner = postfix
myhostname = mail.domainname.tld
mydomain = domainname.tld
myorigin = $myhostname
inet_interfaces = $myhostname
inet_protocols = ipv4
mydestination = $myhostname
unknown_local_recipient_reject_code = 550
mynetworks_style = host
mynetworks = aa.bb.cc.dd
relay_domains = $mydestination
alias_maps = hash:/etc/aliases
alias_database = hash:/etc/aliases
sendmail_path = /usr/sbin/sendmail
newaliases_path = /usr/bin/newaliases
mailq_path = /usr/bin/mailq
setgid_group = postdrop
transport_maps = proxy:mysql:/etc/postfix/mysql/transports.cf
virtual_mailbox_domains = proxy:mysql:/etc/postfix/mysql/domains.cf
virtual_mailbox_base = /srv/mail
virtual_mailbox_maps = proxy:mysql:/etc/postfix/mysql/accounts.cf
virtual_alias_maps = proxy:mysql:/etc/postfix/mysql/forwardings.cf,
proxy:mysql:/etc/postfix/mysql/emails.cf
virtual_minimum_uid = 8
virtual_uid_maps = static:8
virtual_gid_maps = static:8
dovecot_destination_recipient_limit = 1
smtpd_use_tls = no
smtpd_sasl_auth_enable = yes
smtpd_sasl_security_options = noanonymous
broken_sasl_auth_clients = yes
smtpd_sasl_type = dovecot
smtpd_sasl_path = private/auth
strict_rfc821_envelopes = yes
smtpd_recipient_restrictions = permit_mynetworks,
permit_sasl_authenticated, reject_unauth_destination,
reject_non_fqdn_recipient, reject_unknown_recipient_domain

When I try to relay using Outlook, I see the following message in the 
mail.log:

May  3 00:36:33 mail postfix/smtpd[10004]: connect from 
cable.company.client.hostname.com[12.34.56.78]
May  3 00:36:33 mail postfix/smtpd[10004]: NOQUEUE: reject: RCPT from 
cable.company.client.hostname.com[12.34.56.78]: 554 5.7.1 
<cable.company.client.hostname.com[12.34.56.78]>: Client host rejected: 
Access denied; from=<postfixuser at domainname.tld> 
to=<someone at anotherdomainname.tld> proto=ESMTP helo=<mycomputer>
May  3 00:36:33 mail postfix/smtpd[10004]: disconnect from 
cable.company.client.hostname.com[12.34.56.78]
May  3 00:36:33 mail dovecot: pop3-login: Login: 
user=<postfixuser at domainname.tld>, method=PLAIN, rip=12.34.56.78, 
lip=aa.bb.cc.dd
May  3 00:36:33 mail dovecot: POP3(postfixuser at domainname.tld): 
Disconnected: Logged out top=0/0, retr=0/0, del=0/626, size=27305010

I have tried several options for the last 2 days but have not been able to 
get past in relaying email for valid-users from any/all client hosts.

Any help is much appreciated.

Thanks in advance.
N