I am having proplems with pop3 on my windows box.

When I send email to me@mydomain.com, the messages are showing up fine in pop3 screen in management console, but I am having trouble receiving the messages.
If I telnet to my box on port 110, I the passwords are not accepted:

**********
telnet mydomain.com 110

+OK Microsoft Windows POP3 Service Version 1.0
ready.
user billymac
+OK
pass ABCDEFG (not really)
-ERR Logon Failure
***********
I get this with all mailboxes

I tried deleting mailbox and recreating. Also tried resetting password for users but still password not accepted.
Any ideas?

Also get login errors trying to receive with outlook