mozilla thunderbird can receive emails but cannot send (imap/postfix)

Question

i run a dovecot imap server on an ubuntu 8.04 machine (old, i know, but there's no chance of an upgrade any time soon). anyway, all was working smoothly until i rebooted the server the other day and now we cannot send emails through this server. the email clients are all mozilla thunderbird on windows machines. the emails download just fine into thunderbird, but when we try to send emails we get a message saying login to server mail.mydomain and when i click enter new passord it just keeps on failing and displaying the login to server mail.mydomain popup. when i click cancel on this popup, then i get the message:

Sending of message failed. The message could not be sent using SMTP server mail.mailserverdomain for an unknown reason. Please verify that your SMTP server settings are correct and try again, or contact your network administrator.

i have looked in /var/log/mail.log and found this (the thunderbird client in on the windows machine network in this):

Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: warning: database /etc/postfix/client_restrictions.db is older than source file /etc/postfix/client_restrictions
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: connect from my.windows.machine.gateway[xxx.xxx.xxx.xxx]
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: setting up TLS connection from my.windows.machine.gateway[xxx.xxx.xxx.xxx]
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: Anonymous TLS connection established from my.windows.machine.gateway[xxx.xxx.xxx.xxx]: TLSv1 with cipher DHE-RSA-AES256-SHA (256/256 bits)
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: warning: SASL authentication problem: unable to open Berkeley db /etc/sasldb2: No such file or directory 
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: warning: SASL authentication problem: unable to open Berkeley db /etc/sasldb2: No such file or directory 
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: warning: SASL authentication failure: no secret in database
Oct 15 16:29:20 mailserverdomain postfix/smtpd[1918]: warning: my.windows.machine.gateway[xxx.xxx.xxx.xxx]: SASL CRAM-MD5 authentication failed: authentication failure
Oct 15 16:29:23 mailserverdomain postfix/pickup[1622]: 6AFEA12A9C2: uid=33 from=<mythunderbirdusername@mailserverdomain>
Oct 15 16:29:23 mailserverdomain postfix/cleanup[1924]: 6AFEA12A9C2: message-id=<5d030c180944e864204de7263d12c5ba@mailserverdomain>
Oct 15 16:29:23 mailserverdomain postfix/qmgr[22190]: 6AFEA12A9C2: from=<mythunderbirdusername@mailserverdomain>, size=1683, nrcpt=1 (queue active)
Oct 15 16:29:24 mailserverdomain postfix/smtpd[1918]: disconnect from my.windows.machine.gateway[xxx.xxx.xxx.xxx]
Oct 15 16:29:25 mailserverdomain postfix/smtp[1926]: Host offered STARTTLS: [todomain]
Oct 15 16:29:28 mailserverdomain postfix/smtp[1926]: 6AFEA12A9C2: to=<to_username@todomain>, relay=todomain[xxx.xxx.xxx.xxx]:25, delay=5.4, delays=0.12/0/1.7/3.6, dsn=2.6.0, status=sent (250 2.6.0 <5d030c180944e864204de7263d12c5ba@mailserverdomain> [InternalId=9002251459330, Hostname=tosubdomain.todomain] Queued mail for delivery)
Oct 15 16:29:28 mailserverdomain postfix/qmgr[22190]: 6AFEA12A9C2: removed
Oct 15 16:30:06 mailserverdomain postfix/pickup[1622]: 17F5512A9C2: uid=0 from=<mythunderbirdusername@mailserverdomain>
Oct 15 16:30:06 mailserverdomain postfix/cleanup[1924]: 17F5512A9C2: message-id=<[e-mail]>
Oct 15 16:30:06 mailserverdomain postfix/qmgr[22190]: 17F5512A9C2: from=<mythunderbirdusername@mailserverdomain>, size=35784, nrcpt=2 (queue active)
Oct 15 16:30:07 mailserverdomain postfix/smtp[1926]: Host offered STARTTLS: [todomain]
Oct 15 16:30:08 mailserverdomain postfix/smtp[1946]: Host offered STARTTLS: [otherdomain]
Oct 15 16:30:10 mailserverdomain postfix/smtp[1946]: 17F5512A9C2: to=<another_username@otherdomain (i'm not sure why this is here?)>, relay=otherhost[xxx.xxx.xxx.xxx]:25, delay=4.7, delays=0.12/0.01/2.4/2.2, dsn=2.0.0, status=sent (250 ok:  Message 137375323 accepted)
Oct 15 16:30:14 mailserverdomain postfix/smtp[1926]: 17F5512A9C2: to=<to_username@todomain>, relay=todomain[xxx.xxx.xxx.xxx]:25, delay=8.8, delays=0.12/0/1.5/7.2, dsn=2.6.0, status=sent (250 2.6.0 <[e-mail]> [InternalId=9174050144279, Hostname=tosubdomain.todomain] Queued mail for delivery)
Oct 15 16:30:14 mailserverdomain postfix/qmgr[22190]: 17F5512A9C2: removed

the file /etc/default/saslauthd looks like this:

#
# Settings for saslauthd daemon
# Please read /usr/share/doc/sasl2-bin/README.Debian for details.
#

# Should saslauthd run automatically on startup? (default: no)
START=yes
PWDIR="/var/spool/postfix/var/run/saslauthd"
PARAMS="-m ${PWDIR}"
PIDFILE="${PWDIR}/saslauthd.pid"

# Description of this saslauthd instance. Recommended.
# (suggestion: SASL Authentication Daemon)
DESC="SASL Authentication Daemon"

# Short name of this saslauthd instance. Strongly recommended.
# (suggestion: saslauthd)
NAME="saslauthd"

# Which authentication mechanisms should saslauthd use? (default: pam)
#
# Available options in this Debian package:
# getpwent  -- use the getpwent() library function
# kerberos5 -- use Kerberos 5
# pam       -- use PAM
# rimap     -- use a remote IMAP server
# shadow    -- use the local shadow password file
# sasldb    -- use the local sasldb database file
# ldap      -- use LDAP (configuration is in /etc/saslauthd.conf)
#
# Only one option may be used at a time. See the saslauthd man page
# for more information.
#
# Example: MECHANISMS="pam"
MECHANISMS="pam"

# Additional options for this mechanism. (default: none)
# See the saslauthd man page for information about mech-specific options.
MECH_OPTIONS=""

# How many saslauthd processes should we run? (default: 5)
# A value of 0 will fork a new process for each connection.
THREADS=5

# Other options (default: -c -m /var/run/saslauthd)
# Note: You MUST specify the -m option or saslauthd won't run!
#
# See /usr/share/doc/sasl2-bin/README.Debian for Debian-specific information.
# See the saslauthd man page for general information about these options.
#
# Example for postfix users: "-c -m /var/spool/postfix/var/run/saslauthd"
OPTIONS="-c -m /var/spool/postfix/var/run/saslauthd"

any ideas on how to fix this? i have full access to the server so i can provide info from the logs if needs be.