I have installed Qmail via Lifewithqmail instructions. Qmail is working fine. The user directories are getting mail. I am using the qmail pop serve with checkpassword. When I check my mail with outlook I get a message saying the user has no $home/Maildir. Everything seems to be working. I just can't log in from the outside

This is on a Redhat ES3 server.

I can telnet to the mail server from my pc
+OK <4426.1167443997@my.mail.com>
user sdunn
+OK
pass studboy1
-ERR authorization failed
I also tried sdunn@my.mail.com and got the same results.

I telneted to localhost and here is what happened
[root@mail bdallas]# telnet localhost 110
Trying 127.0.0.1...
Connected to localhost.localdomain (127.0.0.1).
Escape character is '^]'.
+OK <5341.1167444889@my.mail.com>
user sdunn
+OK
pass studboy1
-ERR this user has no $HOME/Maildir
Connection closed by foreign host.


when I run the checkpassword test it works:
[root@mail qmail-pop3d]# /var/qmail/bin/qmail-popup hello /bin/checkpassword pwd
+OK <4571.1167444213@hello>
user sdunn
+OK
pass studboy1
/home/sdunn
[root@mail qmail-pop3d]#

C:\Documents and Settings\Administrator>
Here is my qmailctl stat

[root@mail qmail-pop3d]# qmailctl stat
/service/qmail-send: up (pid 2716) 1947 seconds
/service/qmail-send/log: up (pid 2717) 1947 seconds
/service/qmail-smtpd: up (pid 2720) 1947 seconds
/service/qmail-smtpd/log: up (pid 2715) 1947 seconds
/service/qmail-pop3d: up (pid 3300) 1422 seconds
/service/qmail-pop3d/log: up (pid 3301) 1422 seconds
messages in queue: 96
messages in queue but not yet preprocessed: 0

Here is my qmail-pop3d/run file:
#!/bin/sh
exec /usr/local/bin/softlimit -m 2000000 \
/usr/local/bin/tcpserver -v -R -H -l 0 0 110 /var/qmail/bin/qmail-popup \
my.mail.com /bin/checkpassword /var/qmail/bin/qmail-pop3d Maildir 2>&1

I have been at this for about 9 hours now so any help will be greatly appreciated. If you need any more info just let me know.