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Can’t Send Email. Delivery Status Notification (Failure). Error 5.6.2

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Older post from November 14, 2013. Details may be out of date.

Question asked on Nov 14, 2013
I can't send email from my live.com email address. I can receive email and it syncs ok between my PC and iPhone.  This happens with my daughters live.com email address as well. I am using the exchange active sync on iPhone.  Here is the message I receive:

 
From:  *** Email address is removed for privacy ***
Title: Delivery Status Notification (Failure)
Message:

Final-Recipient: rfc822;
Action: failed
Status: 5.6.2
Diagnostic-Code: smtp;554 5.6.2 Delivery SMTP Error. Command: 3. Response: 535 Incorrect authentication data
. Type=1 (-956218626:896:-2147418113)

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