Subscriptions unable to send email of report "Failed to send message" displayed on screen. (4229099)

Subscription is unable to send the email message to mailbox specified in the "To:" field of the "Action" screen of the Subscription Wizard.

Displayed on screen is "Failed to send message".

Shown in the Application Event logs on the MessageStats Server is:

The server rejected the sender address. The server response was: 530 5.7.1 Client was not authenticated
(0x8004020E)

Testing SMTP communication (http://support.microsoft.com/kb/153119) via Telnet also fails with the same Exchange error code 530 5.7.1.