I have setup redirect on DNS and SMTP for my clients so that they use the ISPs settings without having to go to each and every client. all is working except for those that have SMTP servers that require authentication. It fails unless that button is unchecked. Is there a way for the mikrotik to handle this setting?
router has no control over SMTP traffic and options that are advertised by SMTP server. All you can do is to configure your SMPT server to accept clients even if they are proving logging credentials that are not correct.
On the other hand it would be better to inform users that outgoing SMTP is only available through ISP SMTP server or they should use encryption (SSL/TLS) to communicate with SMTP server of their preference.
you can filter those packets, you cannot change settings that are sent. Also there is a problem, redirect has to be done when connection is initialized, and options are sent afterwards, so you have a problem - connection is established and you cannot redirect that any more.