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Outlook 2010 fails login to POP3/SMTP services on Server 2003

I have a windows 2003 server that I originally put online in 1999 for self education and to host my own website and email (POP3 and SMTP) services. I now provide the same services for half a dozen clients with individual domains. One client has just attempted to upgrade to Outlook 2010 and called for help when attempts to login failed. It appears that the problem occurs because Outlook 2010 uses the CAPA command in place of the AUTH command in its connection string.
Following are network traces that provide more information:

From Outlook 2010 making a connection attempt . . .
449   3.055000  MXSERVER   MXCLIENT   POP3   POP3:Response: +OK: Microsoft Windows POP3 Service Version 1.0 <846424703@banshee.corp.technologytoolbox.com> ready.
450   3.055000  MXCLIENT    MXSERVER  POP3   POP3:Command: CAPA
451   3.056000  MXSERVER   MXCLIENT   POP3   POP3:Response: -ERR, Error: Unacceptable command
452   3.056000  MXCLIENT    MXSERVER  POP3   POP3:Command: QUIT

From Outlook 2007 making a connection attempt . . .
2225   15.118164   MXSERVER   MXCLIENT   POP3   POP3:Response: +OK: Microsoft Windows POP3 Service Version 1.0 <846956359@banshee.corp.technologytoolbox.com> ready.
2229   15.210937   MXCLIENT    MXSERVER   POP3    POP3:Command: AUTH  
2230   15.212890   MXSERVER   MXCLIENT    POP3    POP3:Response: +OK
2231   15.241211   MXCLIENT    MXSERVER    POP3   POP3:Command: AUTH  NTLM
2232   15.243164   MXSERVER   MXCLIENT    POP3    POP3:Response: +OK

I am looking for a workaround to this problem. Can either Outlook or Server 2003 be configured to accommodate the other? Failing to find a workaround I may have to upgrade the services. I would welcome suggestions regarding alternatives.
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Justin Owens
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KWHenderson

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Hello DrUltima;

  Thank you for respoinding. I had reveiwed the information at the links you provided prior to submitting to the Experts Exchange. In fact, the Jeremy Jameson page is where I found the network traces in my original posting. You have presented what I need to make a decision. I will move along to SSL or not support Outlook 2010.