Chances are high that you've configured basic authentication in SSRS for talking to the mail server, and it's configured to reject basic authentication.
Note the Important warning at the top of this page: https://learn.microsoft.com/en-us/sql/reporting-services/install-windows/e-mail-settings-reporting-services-native-mode-configuration-manager?view=sql-server-ver16 It says that Basic Auth with Client Submission is being disabled.
Depending upon the mail server that you're using, it's also possible that it has an allow list for IP addresses. Check to make sure that's ok if it's used.