Authentication for e-mail is not working

PHPBB 3.2.0-RC1 is unable to authenticate against a SMTP Server when trying to send emails.

Repro:

• Configure Login Authentication
  
• Try to authenticate by sending a testmail - in my case Exchange 2013.

Analysis:

Exchange shows the following diag in receive connector logs -

2016-10-02T10:40:22.036Z,MBX2\Application Frontend MBX2,08D3E2E35D3EA2C9,18,10.1.1.38:25,10.1.1.53:33590,*,,User Name: noreply@hihosoft.at
2016-10-02T10:40:22.036Z,MBX2\Application Frontend MBX2,08D3E2E35D3EA2C9,19,10.1.1.38:25,10.1.1.53:33590,*,Tarpit for '0.00:00:05' due to '535 5.7.3 Authentication unsuccessful',
2016-10-02T10:40:27.048Z,MBX2\Application Frontend MBX2,08D3E2E35D3EA2C9,20,10.1.1.38:25,10.1.1.53:33590,>,535 5.7.3 Authentication unsuccessful,

Sniffering in Wireshark shows that instead of sending the correct password to the server, only a collection of "*" (asterisk) is sent. See below

Username and PWD are base64 encoded, so lets decode that -

bm9yZXBseUBoaWhvc29mdC5hdA== -> noreply@hihosoft.at
KioqKioqKio= -> ********

It seems that we pass a wrong value to whichever component is trying to authenticate, therefore failing auth.