New Mailing Mailing_send_test fails even though Mail configuration test passes

I upgraded to 4.7.4 over the weekend. I tried to send a test for a new mailing and got (for a valid user@domain)

Error in call to Mailing_send_test : Failed to add recipient: user@domain [SMTP: Invalid response code received from SMTP server while sending email. This is often caused by a misconfiguration in Outbound Email settings. Please verify the settings at Administer CiviCRM >> Global Settings >> Outbound Email (SMTP). (code: 550, response: Verification failed for No Such User Here" Sender verify failed)]

I double checked the SMTP settings and sent a successful test from there.