Question : SBS2008 GoDaddy as SmartHost for email.

Hey Experts.
I am trying to configure GoDaddy email as my email smarthost and am having issues.  
I have configured smarthosts before with not issues and am thinking there is something more going on then a configuration issue.  

If i go to the Queue the message says:
451 4.4.0 Primary target IP address responded with: "451 5.7.3 Require STARTTLS to do basic authentication."

If i remove the check mark on the send connector for "basic authentication over TLS" i get:
451 4.4.0 Primary target IP address responded with: "451 5.7.3 Require basic authentication"

Here is the log from my SMTPsend .  This is what is in there very time i try sending.
2010-05-16T18:23:59.748Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,0,,216.69.186.201:25,*,,attempting to connect
2010-05-16T18:23:59.869Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,1,192.168.0.2:21016,216.69.186.201:25,+,,
2010-05-16T18:24:00.475Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,2,192.168.0.2:21016,216.69.186.201:25,<,220 m1pismtp01-005.prod.mesa1.secureserver.net ESMTP,
2010-05-16T18:24:00.475Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,3,192.168.0.2:21016,216.69.186.201:25,>,EHLO mail.lakemiltonagolfclub.com,
2010-05-16T18:24:00.582Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,4,192.168.0.2:21016,216.69.186.201:25,<,250-m1pismtp01-005.prod.mesa1.secureserver.net,
2010-05-16T18:24:00.582Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,5,192.168.0.2:21016,216.69.186.201:25,<,250-8BITMIME,
2010-05-16T18:24:00.582Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,6,192.168.0.2:21016,216.69.186.201:25,<,250 SIZE 31457280,
2010-05-16T18:24:00.582Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,7,192.168.0.2:21016,216.69.186.201:25,>,QUIT,
2010-05-16T18:24:00.689Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,8,192.168.0.2:21016,216.69.186.201:25,<,221 m1pismtp01-005.prod.mesa1.secureserver.net,
2010-05-16T18:24:00.689Z,Windows SBS Internet Send SBS2008,08CCC11347D3D7D4,9,192.168.0.2:21016,216.69.186.201:25,-,,Local

Answer : SBS2008 GoDaddy as SmartHost for email.

I couldn't wait to get a answer for this question so i contacted Microsoft.  After spending almost 5 hours on the phone with Microsoft business support we have figured out a solution for the issue.

Microsoft says that there is a issue on GoDaddy's end and Microsoft is getting there documentation together to get on a conference call with godaddy to show them there issue...From what they have found when you connect to smtpout.secureserver.net you are connecting to a random SMTP server in a group.  Not all those server are responding properly which is causing the failure.

But anyways the solution.
If you do a telnet smtpout.secureserver.net 25
Copy the banner that is presented Example "p3plsmtpa01-v01.prod.phx3.secureserver.net"
In your smarthost configuration replace the smtpout.secureserver.net with that above banner.  

If you ran the telnet command a few times the "p3plsmtpa01-v01" portion changes as you connect to different servers.  You are able to create a couple smarthosts connecting to these different addresses that way if one of them is down it will role over to the next available...

I know this doesn't solve the smtpout.secureserver.net issue directly but by putting in the direct SMTP server address it will make the server work correctly!