I just verified that this is working on campus using Thunderbird 3.1 and Thunderbird 5.
Look at the settings for the outgoing smtp server, and then look at the Security and Authentication section. It should read:
Connection security: STARTTLS
Authentication method: Normal password
User Name: <your_uloginid> (i.e. jdoe , not email@example.com
We are using a self-signed certificate, so the first time you try to connect, you'll receive a pop-up window from Thunderbird telling you that you need to add a security exception. Check off 'Permanently store this exception' and Click on the Confirm Security Exception.