Its an Outlook thing rather than IMAP/POP3.If I remember correctly, for Thunderbird, Incoming and Outgoing servers are configured independantly anyway and there isn't the option to use the Incoming server credentials for outgoing mail.
I thought I'd bump this thread to say that BT still have not solved their relationship with Yahoo log and passwords on multiple devices. It has been an utter nightmare.
I have spent all morning (yet again) trying to resolve this on my husbands ipad (and I'm technical). I will be closing my account with BT and moving to icloud permanently.