I just tested it and received the same message you did.
I then checked the box under Advanced Settings > Outgoing Server Settings to Use authentication (ESMTP). I was then able to send mail using the Gmail account.
One weird thing though.. it just downloaded 171 messages. Considering I downloaded the whole account this morning, it shouldn't have done that. I'm guessing that my settings at Gmail are a bit screwy.
Hope this helps.
Chris