Try changing the permissions:
ESM->Administrative Groups->First Administrative Group->Servers->(Your Server)->Protocols->SMTP->Default SMTP Virtual Server->Properties->Access->Authentication->Users and grant Authenticated Users the Relay Permission
since this is not happening all the time I cannot see the issue will be resolved by changing the relay permissions on the server. Although it should be set for only authenticated users, still if this were the issue, this would be happening ALL the time and littlejuanito7 states it does not happen all the time. Any update littlejuanito7?
nothing new so far. still only happens on occassion to different users. even when they send out to people they had emailed successfully before. still working on figuring out a solution to it so we can avoid it in the future. thanks for the help so far everyone.