Okay, I'm made some exciting progress and I am grateful for the help. I will show to people how I got this working
At first thought, I figured that it would simply be the IMAP password used by Dovecot to access my mailbox. Not exactly true... I did some digging in some blogs and the documentation for Dovecot and Postfix. I configured Dovecot to authenticate using a SHA512 encrypted password in a SQL database, just as was posted in a blog some time back (Reference 1). I found out that I can have SASL authentication for Postfix via Dovecot. I made a few changes according to a blog post (Reference 2) I can send and receive mail from Thunderbird now, which resolves this long and tortured thread. For the good of the internet community, I am sharing my configuration in it's working state. After all this, my main.cf has evolved to become: mydomain = example.com smtpd_banner = $myhostname ESMTP $mail_name (Ubuntu) biff = no append_dot_mydomain = no readme_directory = no # TLS parameters smtpd_tls_security_level = may smtpd_tls_loglevel = 1 smtpd_tls_cert_file=/etc/letsencrypt/live/example.com/fullchain.pem smtpd_tls_key_file=/etc/letsencrypt/live/example.com/privkey.pem #smtpd_use_tls=yes #smtpd_tls_session_cache_database = btree:${data_directory}/smtpd_scache smtp_tls_session_cache_database = btree:${data_directory}/smtp_scache #Added December 1, 2016 TLS parameters smtpd_tls_received_header = yes smtpd_tls_auth_only = no smtpd_use_tls=yes smtp_tls_note_starttls_offer = yes smtpd_tls_session_cache_timeout = 3600s #end December 1, 2016 TLS parameters smtpd_relay_restrictions = permit_mynetworks permit_sasl_authenticated defer_unauth_destination myhostname = example.com alias_maps = hash:/etc/aliases alias_database = hash:/etc/aliases myorigin = /etc/mailname #mydestination = $myhostname, example.com, localhost.com, , localhost mydestination = localhost relayhost = mynetworks = 127.0.0.0/8 [::ffff:127.0.0.0]/104 [::1]/128 mailbox_size_limit = 0 recipient_delimiter = + inet_interfaces = all inet_protocols = all virtual_transport = lmtp:unix:private/dovecot-lmtp virtual_mailbox_domains = mysql:/etc/postfix/mysql-virtual-mailbox-domains.cf virtual_mailbox_maps = mysql:/etc/postfix/mysql-virtual-mailbox-maps.cf virtual_alias_maps = mysql:/etc/postfix/mysql-virtual-alias-maps.cf #Added December 1 to enable SASL with Dovecot smtpd_sasl_type = dovecot smtpd_sasl_path = private/auth smtpd_sasl_local_domain = example.com smtpd_sasl_security_options = noanonymous broken_sasl_auth_clients = yes smtpd_sasl_auth_enable = yes smtpd_recipient_restrictions = permit_mynetworks, permit_sasl_authenticated, reject_unauth_destination #End December 1 SASL/Dovecot parameters and the master.cf has become: ========================================================================== # service type private unpriv chroot wakeup maxproc command + args # (yes) (yes) (no) (never) (100) # ========================================================================== smtp inet n - y - - smtpd submission inet n - n - - smtpd -o syslog_name=postfix/submission -o smtpd_tls_security_level=encrypt -o smtpd_sasl_auth_enable=yes -o smtpd_recipient_restrictions=permit_sasl_authenticated,reject -o milter_macro_daemon_name=ORIGINATING pickup unix n - y 60 1 pickup cleanup unix n - y - 0 cleanup qmgr unix n - n 300 1 qmgr tlsmgr unix - - y 1000? 1 tlsmgr rewrite unix - - y - - trivial-rewrite bounce unix - - y - 0 bounce defer unix - - y - 0 bounce trace unix - - y - 0 bounce verify unix - - y - 1 verify flush unix n - y 1000? 0 flush proxymap unix - - n - - proxymap proxywrite unix - - n - 1 proxymap smtp unix - - y - - smtp relay unix - - y - - smtp showq unix n - y - - showq error unix - - y - - error retry unix - - y - - error discard unix - - y - - discard local unix - n n - - local virtual unix - n n - - virtual lmtp unix - - y - - lmtp anvil unix - - y - 1 anvil scache unix - - y - 1 scache maildrop unix - n n - - pipe flags=DRhu user=vmail argv=/usr/bin/maildrop -d ${recipient} uucp unix - n n - - pipe flags=Fqhu user=uucp argv=uux -r -n -z -a$sender - $nexthop!rmail ($recipient) ifmail unix - n n - - pipe flags=F user=ftn argv=/usr/lib/ifmail/ifmail -r $nexthop ($recipient) bsmtp unix - n n - - pipe flags=Fq. user=bsmtp argv=/usr/lib/bsmtp/bsmtp -t$nexthop -f$sender $recipient scalemail-backend unix - n n - 2 pipe flags=R user=scalemail argv=/usr/lib/scalemail/bin/scalemail-store ${nexthop} ${user} ${extension} mailman unix - n n - - pipe flags=FR user=list argv=/usr/lib/mailman/bin/postfix-to-mailman.py ${nexthop} ${user} References: (1) https://www.digitalocean.com/community/tutorials/how-to-configure-a-mail-server-using-postfix-dovecot-mysql-and-spamassassin (2) http://xmodulo.com/enable-user-authentication-postfix-smtp-server-sasl.html