(It may be worth starting a separate thread for this, since it sounds like an issue with IMAP rather than with SMTP...)

Are you seeing any kind of message from modest about a bad signature? The message may only appear the first time you try to connect -- so disconnect your account (just editing the account details should do that) and then try to send/receive messages to reconnect, and note if any message pops up. If not, this doesn't sound like the same issue I was seeing...

In any case, turn on debug logging to see if that provides any hints as to what the problem is -- from the terminal, run this command:
If you want to save it to a file that can then be posted, add the following at the end of the command, which will save to a file named gmail-imap.log (just make sure before posting that no personal information is in the log...!):
(Note that the 'greater-than' at the beginning is part of the command, and this should all be added as a continuation of the previous command, on the same line...)