I upgraded from 4.4.1 to 5.2.4 and I have enabled sending email but not reading email with:
Sending email with no authentication via Exchange works fine. But using authentication produces the message
Googling found http://community.office365.com/en-us/forums/160/p/77364/296367.aspx#296367 which suggests that this is a response from Exchange when the From address doesn't match the userid that authenticated with Exchange.
Sure enough, when I changed the From address in my mail server configuration to match the user id that authenticated with Exchange, it worked.
This regression is likely going to be a problem for people who have been using different From addresses for each JIRA project in their Notification Scheme configuration (https://confluence.atlassian.com/display/JIRA/Configuring+Email+Notifications#ConfiguringEmailNotifications-Configuringaproject'semailaddress)
Please refer to 550 5.7.1 Unable to Relay Mail From Exchange Server for a list of symptoms and the resolution.