dovecot - Oct 2006 - Proxy not working using passwd-file

I've been having problems setting up my proxy using dovecot. I'm using
the passwd-file for authentication as well as the regular unix passwd
file. Can someone provide me with a complete example of how this should
be done, I'm finding that the documentation on
http://wiki.dovecot.org/AuthSpecials is sparse on the details. Please do
not assume anything as I am new to both Dovecot as well as Linux (FC5).