I was also having a hard time setting up my smtp settings for my website. I had followed all the posts and help topics from godaddy and still was coming up with the same errors. Finally I had found a solution online and decided to share my knowledge here.

in the SMTP Server and Port text box enter relay-hosting.secureserver.net INSTEAD of the recommended smtpout.secureserver.net if this option is not working for you.

Click Basic for SMTP Authentication

In the SMTP Username enter your godaddy email account username (ex. admin@yourdomain.com)

in the SMTP Password, enter your godaddy email account password.

This worked for me. I hope it helps others.

Why does everything I try with these settings fail! I was using it with my BT account but that is not going to happen anymore as they constantly block all my feedback emails unless I have the from field set to my own email address, which is obviously pointless as I cannot contact anyone back!

I have tried using the recommended settings for google mail and hotmail, both fail miserably, even though I have done it all as instructed. Is there a bug with DNN as the BT account was working (not with SSL) but google mail and hotmail fail. Also to make things worse I have reset this to my BT one, and now even that is failing? Didn't realise this simple part of DNN was so buggy tbh.

THE SOLUTION.

The problem with sending e-mail at GoDaddy hosted sites is . . . .

You can't send an e-mail through their SMTP servers that is FROM a Domain outside their DNS Servers.

For example, if your domain is www.fred.com and that domain is controlled by GoDaddy servers then you CAN send an e-mail with this FROM address, for example fred@fred.com.

If, however, your FROM address is fred@gmail.com or any other domain outside GoDaddy's DNS control then the mail will be denied.
Makes sense if you think about it . . . it's how GoDaddy prevents people from using their servers to spoof e-mail.

How do you avoid this - by making sure that every admin/super user account and/or the HOST e-mail account ( in HostSettings) are set to GoDaddy e-mail addresses.

Since GoDaddy gives you 100 e-mail accounts with almost all of their hosting accounts, just set one or more of them to something like webmaster@yourdomain.com, then set them to relay to the address you really want.

That and using the relay-hosting.secureserver.net with annonomous authentication and you're all set.