Configuration could not be verified – Is the username or password wrong? from Thunderbird with Postfix and Dovecot on Ubuntu Server 16.04

So I have done a very basic install of Postfix and Dovecot on my Ubuntu Server 16.04 and I am having trouble to setup / login to my account with Thunderbird.

Installed of Postfix by following steps 1-5 in this guide:
https://www.digitalocean.com/community/tutorials/how-to-install-and-configure-postfix-on-ubuntu-16-04
Installed Dovecot with the help from this link: https://help.ubuntu.com/community/Dovecot

The error I got from Thunderbird is "Configuration could not be verified – Is the username or password wrong?". When I look in syslog, auth.log and mail.log I am unable to see why and where the login fails. Mail.err does not include any details either.

If I run "postconf -n" I get the following:

alias_database = hash:/etc/aliases
alias_maps = hash:/etc/aliases
append_dot_mydomain = no
biff = no
home_mailbox = Maildir/
inet_interfaces = all
inet_protocols = all
mailbox_size_limit = 104857600
mydestination = $myhostname, example.com, mail.example.com, localhost.example.com, localhost
myhostname = localhost.localdomain
mynetworks = 127.0.0.0/8 [::ffff:127.0.0.0]/104 [::1]/128
myorigin = /etc/mailname
readme_directory = no
recipient_delimiter = +
relayhost =
smtp_tls_session_cache_database = btree:${data_directory}/smtp_scache
smtpd_banner = $myhostname ESMTP $mail_name (Ubuntu)
smtpd_relay_restrictions = permit_mynetworks permit_sasl_authenticated defer_unauth_destination
smtpd_tls_cert_file = /etc/ssl/certs/ssl-cert-snakeoil.pem
smtpd_tls_key_file = /etc/ssl/private/ssl-cert-snakeoil.key
smtpd_tls_session_cache_database = btree:${data_directory}/smtpd_scache
smtpd_use_tls = yes
virtual_alias_maps = hash:/etc/postfix/virtual

If I run "dovecot -n" I get the following:

# 2.2.22 (fe789d2): /etc/dovecot/dovecot.conf
# Pigeonhole version 0.4.13 (7b14904)
# OS: Linux 4.4.0-93-generic x86_64 Ubuntu 16.04.3 LTS
mail_location = maildir:~/Maildir
namespace inbox {
  inbox = yes
  location =
  mailbox Drafts {
   special_use = \Drafts
  }
  mailbox Junk {
   special_use = \Junk
  }
  mailbox Sent {
special_use = \Sent
  }
  mailbox "Sent Messages" {
special_use = \Sent
  }
  mailbox Trash {
special_use = \Trash
  }
  prefix =
}
passdb {
  driver = pam
}
protocols = imap
service imap-login {
  inet_listener imaps {
   port = 993
ssl = yes
  }
}
ssl_cert = </etc/ssl/certs/ssl-cert-snakeoil.pem
ssl_key = </etc/ssl/private/ssl-cert-snakeoil.key
userdb {
  driver = passwd
}

If I run "telnet localhost imap2" and then A1 LOGIN username password I get this result:

anders@toshiban:~$ telnet localhost imap2
Trying ::1...
Connected to localhost.
Escape character is '^]'.
* OK [CAPABILITY IMAP4rev1 LITERAL+ SASL-IR LOGIN-REFERRALS ID ENABLE IDLE STARTTLS AUTH=PLAIN] Dovecot ready.
A1 LOGIN anders password
A1 OK [CAPABILITY IMAP4rev1 LITERAL+ SASL-IR LOGIN-REFERRALS ID ENABLE IDLE SORT SORT=DISPLAY THREAD=REFERENCES THREAD=REFS THREAD=ORDEREDSUBJECT MULTIAPPEND URL-PARTIAL CATENATE UNSELECT CHILDREN NAMESPACE UIDPLUS LIST-EXTENDED I18NLEVEL=1 CONDSTORE QRESYNC ESEARCH ESORT SEARCHRES WITHIN CONTEXT=SEARCH LIST-STATUS BINARY MOVE SPECIAL-USE] Logged in
e logout
* BYE Logging out
e OK Logout completed.
Connection closed by foreign host.

Please let me know if there is anything I can add to this question in order to help you help me figure this out.

Best regards
Anders