Question:
I want to use authentication in my server so that I will be able to use username and password

Answer:

1. Make sure that your authentication settings are set to authenticate the users like in the picture below
   
2. Create a new dummy domain or use one of the existing domains in the server as depicted below
   
3. Create a user in that domain with a password and option to send email as in the picture below
   
4. In your mail client, specify your username (user1@domain1.com) and password you chose in previous step. See the example below (I used my "The Bat!" mail client for this example)