After further investigating this i think i may have found a dirty fix. The fix would be to have the user's email password changed to something WITHOUT spaces.
I fixed this for a client of mine. I think this should be put into cpanel's add new email account so that people know they're doing this on their own.
So, a password using SPACES can cause that error. Tried everything, but NOTHING, besides the PASSWORD CHANGE to something that had NO SPACES fixed it.
Hope it helps
In cPanel 11.25 we updated our password validation to prevent spaces in passwords. All passwords.