Recently while doing some custom developments for a client I ran into a few issues with SMTP Credentials on SugarCRM. Specifically, concern GMail not connecting with SugarCRM. The issues stems from a basic authentication / captcha issue. How? The issues apparently stems from the idea that a user needs to approve the Captcha from GMail to send out emails using SMTP. Google needs to approve the sanctioned activity, i.e. connecting Sugar to Gmail using SMTP credentials.
I'll identify the error in the logs, and how to go about solving it. Once again, this is more for personal use and hopefully someone else will benefit.

Sugar SMTP Gmail Error Log

SMTP -> ERROR:Password not accepted from server. Code: 535 Reply: 535-5.7.1 Please log in with your web browser and then try again.
This error is present in the debug logs. You'll find it by going to the Admin section of Sugar, clicking on System Settings and then increasing the sugar_log write level. Since I was debugging and making customizations...I put the Sugar sensitivity level on 'debug'. *Note to switch this once you go into production otherwise you'll have excess logs.

Solution for the SMTP GMail Password Error:

Log into the specified GMail account. Click go this link: After going there remember to go through the process and validate that everything works. Validate that the Captcha unlock worked by going to Sugar and testing the SMTP credentials by sending another email out.