dovecot - May 2014 - IMAP clients can't connect while dovecot 2.0.9 is configured for LDAP

Good evening,
Currently, it?s using mySQL for the passdb and userdb. This works fine 
but when I switch to LDAP it starts having problems. I?m trying to set 
up dovecot to use LDAP as its userdb and passdb. I?ve read the docs but 
I think I may be missing something obvious or I didn?t understand 
something right. The clients can?t connect through IMAP using 
MD5-Challenge Response. They also don?t work with plain auth..
When I run the command ` doveadm auth user at domain.com ` , it works! When 
I run ` doveadm auth -x service=imap user at domain.com ` that also works! 
What am I doing wrong???
I get the following error:
Error: Apr 29 02:04:02 servername dovecot: auth: Fatal: CRAM-MD5 
mechanism can't be supported with given passdbs

Here is my config:
# 2.0.9: /etc/dovecot/dovecot.conf
# OS: Linux 2.6.32-431.5.1.el6.x86_64 x86_64 CentOS release 6.5 (Final) 
ext4
auth_debug = yes
auth_verbose = yes
mail_location = maildir:/home/mailuser/%u
managesieve_notify_capability = mailto
managesieve_sieve_capability = fileinto reject envelope 
encoded-character vacation subaddress comparator-i;ascii-numeric 
relational regex imap4flags copy include variables body enotify 
environment mailbox date
mbox_write_locks = fcntl
passdb {
args = /etc/dovecot/dovecot-ldap.conf.ext
driver = ldap
}
plugin {
sieve_dir = ~/sieve
sieve_global_dir = /var/lib/dovecot/sieve/
sieve_global_path = /var/lib/dovecot/sieve/default.sieve
}
protocols = pop3 imap sieve lmtp sieve
service auth {
unix_listener /var/spool/postfix/private/auth {
group = postfix
mode = 0666
user = postfix
}
unix_listener auth-userdb {
group = mailuser
mode = 0640
user = mailuser
}
}
service managesieve-login {
inet_listener sieve {
port = 4190
}
}
ssl_cert = </etc/ssl/certs/servernameredacted.crt
ssl_key = </etc/ssl/certs/servernameredacted.key
userdb {
args = /etc/dovecot/dovecot-ldap-userdb.conf.ext
driver = ldap
}
protocol lmtp {
mail_plugins = " sieve"
}
protocol lda {
mail_plugins = " sieve"
}


Thank you for any help or links to docs!