[Dovecot] troubleshooting new dovecot installation

[Ray]

Hello,
I'm setting up a new mail server using freebsd 6.2, postfix, dovecot  with 
SASL and, eventually, squirrelmail.
I've gone through 
http://wiki.dovecot.org/TestPop3Installation
the program is running, plain works over telnet from local host or from a 
remote machine. I can do stat and retr commands.
however, when I try to use the login method 
(that is what the command
1 login username password  
part is, isn't it?)
all I get is:
-ERR Unknown command.
even with auth_verbose = yes 
auth_debug = yes, logs give no information.
May  7 20:41:53 server dovecot: pop3-login: Disconnected: rip=1.2.3.4, 
lip=1.2.3.4
(IP's substituted)


 almost all of the users will be using outlook/outlook express so I'm only 
enabling plain and login methods.

thanks
Ray


 
dovecot -n gives
protocols: imap pop3
ssl_disable: yes
disable_plaintext_auth: no
login_dir: /var/run/dovecot/login
login_executable(default): /usr/local/libexec/dovecot/imap-login
login_executable(imap): /usr/local/libexec/dovecot/imap-login
login_executable(pop3): /usr/local/libexec/dovecot/pop3-login
verbose_proctitle: yes
first_valid_gid: 0
mail_extra_groups: mail
mail_location: maildir:/usr/local/mail/%d/%n
mail_executable(default): /usr/local/libexec/dovecot/imap
mail_executable(imap): /usr/local/libexec/dovecot/imap
mail_executable(pop3): /usr/local/libexec/dovecot/pop3
mail_plugin_dir(default): /usr/local/lib/dovecot/imap
mail_plugin_dir(imap): /usr/local/lib/dovecot/imap
mail_plugin_dir(pop3): /usr/local/lib/dovecot/pop3
imap_client_workarounds(default): delay-newmail outlook-idle netscape-eoh 
tb-extra-mailbox-sep
imap_client_workarounds(imap): delay-newmail outlook-idle netscape-eoh 
tb-extra-mailbox-sep
imap_client_workarounds(pop3): outlook-idle
pop3_uidl_format(default):
pop3_uidl_format(imap):
pop3_uidl_format(pop3): %08Xu%08Xv
pop3_client_workarounds(default):
pop3_client_workarounds(imap):
pop3_client_workarounds(pop3): outlook-no-nuls oe-ns-eoh
auth default:
  mechanisms: plain login
  passdb:
    driver: pam
  passdb:
    driver: sql
    args: /usr/local/etc/dovecot-sql.conf
  userdb:
    driver: passwd
  userdb:
    driver: prefetch
    args: /usr/local/etc/dovecot-sql.conf
  socket:
    type: listen
    client:
      path: /var/spool/postfix/private/auth
      user: postfix
      group: postfix
    master:

 I don't think it matters, but for the sake of formality:
server# grep -v '^ *\(#.*\)\?$' dovecot-sql.conf
driver = mysql
connect = host=/tmp/mysql.sock dbname=******** user=******** password=*******
password_query = SELECT md5(userpassword) AS password, home, virtual_uid AS 
userdb_uid, virtual_gid AS userdb_gid FROM virtual_users WHERE email = '%u' 
AND active = 1