Okay, that seems to be getting me closer. After the change, I found that an error pointed to the softlimit, made the following change:
exec /usr/local/bin/softlimit -m 50000000
to the /var/qmail/supervise/qmail-smtpd/run file
and now I can telnet to port 25
Now I am having an authentication error, but at least I am closer now and cane find leads to the auth error in qmail (Message not sent. Server replied:
Authentication failed
535 authorization failed (#5.7.0))
Thank you very much for your help