qmail smtp auth problem - authentication failed

I want to implement netqmail 1.05 + pop + smtp + smtp auth (without
TLS)

I downloaded netqmail 1.05 + smtp auth
(http://shupp.org/smtp-auth-tls/). Commented out define CRAM_MD5 in
qmail-smtpd.c, remove -DTLS in conf-cc, then followed the standard
procedure to install qmail.

My /var/qmail/supervise/qmail-smtpd/run looks like this
======================================
#!/bin/sh

QMAILDUID=`id -u qmaild`
NOFILESGID=`id -g qmaild`
MAXSMTPD=`cat /var/qmail/control/concurrencyincoming`
LOCAL=`head -1 /var/qmail/control/me`

if [ -z "$QMAILDUID" -o -z "$NOFILESGID" -o -z "$MAXSMTPD" -o -z
"$LOCAL" ]; then
echo QMAILDUID, NOFILESGID, MAXSMTPD, or LOCAL is unset in
echo /var/qmail/supervise/qmail-smtpd/run
exit 1
fi

if [ ! -f /var/qmail/control/rcpthosts ]; then
echo "No /var/qmail/control/rcpthosts!"
echo "Refusing to start SMTP listener because it'll create an open
relay"
exit 1
fi

exec /usr/local/bin/softlimit -m 2000000 \
/usr/local/bin/tcpserver -v -R -l "$LOCAL" -x /etc/tcp.smtp.cdb -c
"$MAXSMTPD" \
-u "$QMAILDUID" -g "$NOFILESGID" 0 smtp
/var/qmail/bin/qmail-smtpd \
my.fqdn.com /bin/checkpassword /bin/true 2>&1

======================================

qmail and smtpd started, but when I use outlook to connect to the
server using smtp auth, it kept asking me for a login password and
authenticated failed.

I've searched thru this group and looks like everyone is use smtp auth
+ vpopmail. I wonder whether this is a must and whether TLS is also
required for the patch. I've spent over a week trying to figure out
what is wrong with my installation with no luck.

Thanks in advance.
Barry