Whilst I'm likely to be stating the obvious, but I imagine that you've contacted your ISP and confirmed the name and / or IP addresses of their SMTP and POP3 servers ?
I.e. They're not always the same and or you might find that they can direct you to an alternative SMTP server in their domain. It's worth a try.
Now I'm not sure why OLE would work where OL does not but, as WDTBD wrote above, ( in simple terms ) 'relaying' is where you're email client program trys to send an email through a server which does not belong to your ISP.
E.g. Imagine that you're logged on to your ISP ( say, BTOpenWorld ), what you'd expect to see for your pop3 and smtp settings would be something like:
POP3:
www.pop3.btinternet
SMTP:
www.smtp.btinternet
or sometimes -
POP3: relay.btinternet.com
SMTP: relay.btinternet.com
whatever.....
Now in Outlook you can certainly specify more than one 'Internet Email' account, e.g. for when you're retrieving emails from more than one ISP ( e.g. maybe from BTOpenWorld and also from Free-OnLine), but I would suggest that if you do that you ensure that the SMTP server that's specified for each Internet email account always points to the one that's relevant to the ISP to whom you are connected.
I.e. If you're connected to BTOpenWorld then the smtp server for your BtOpenWorld Inernet Email account should be set to (say) relay.btinternet.com.
BUT if you had another Internet Email account specified ( e.g. Free-OnLine ) then that must also use the same smtp as the BTOpenWorld account.
E.g. If looking in the 'services' properties page and for the 'properties' of each Internet Email account you should expect to have set something as follows for the 'Servers':
Internet Email BTOpenWOrld
POP3: relay.btinternet.com
SMTP: relay.btinternet.com
Internet Email Free-OnLine
POP3: pop3.free-online.net
SMTP: relay.btinternet.com
One other thing that might cause the SMTP relay problem could be the 'Delivery' settings in Outlook, i.e. if you've got more than one 'Internet Email' account specified then you need to ensure that the one at the top of the delivery list ( i.e. in the larger of the two boxes, under where it says 'Recipient addresses are processed by these information services in the following order:' ) is the one relevant to the ISP to whom you are connected, e.g. in the above example BTOpenWorld would be above Free-OnLine. Nb. I have suffered that little 'gotcha' myself !
Of course if on your travels you connect to more than one ISP then you should use the 'Profiles' option of Outlook ( Nb. you can only get to this from Start / Settings / Control Panel / Mail ) to specify multiple profiles for the differing ISP connections ( and their associated smtp server & delivery requirements ).
Finally, whilst the above I'm sure seems overly long winded and verbose it's really pretty straightforward once you know your way around it - sort of.