[Dovecot] Authentication problem - or is it?

My old server ran v.0.99, and this is the first time I've tried to get v.1 running. When I try to test it with telnet I see

telnet localhost 143 Trying 127.0.0.1... Connected to david.lydgate.lan (127.0.0.1). Escape character is '^]'.

• OK Dovecot ready. x login anne xxxxxx x OK Logged in. Connection closed by foreign host.

I assumed it was an authentication problem (I want to use /etc/passwd as the authentication file) but it does say that I managed to log in. If so, what could be causing it to close immediately?

Anne