Changes have been made in Git (master):

commit ad9066f5c67e36b17eae627a6e819d7549a683fc
Author: Jan Schneider <jan@horde.org>
Date:   Mon Nov 18 20:55:32 2013 +0100

     [jan] Don't try authentication to SMTP server if explicitly 
disabled (Bug #12830).

  framework/Core/lib/Horde/Core/Factory/Mail.php |    4 +++-
  framework/Core/package.xml                     |    4 ++--
  2 files changed, 5 insertions(+), 3 deletions(-)

http://git.horde.org/horde-git/-/commit/ad9066f5c67e36b17eae627a6e819d7549a683fc

Configuring "No authentication" (using smtp as mailer type) leads in a
$conf['mailer']['params']['auth'] = false;

Script horde-alarms is using a Horde_Core_Factory_Mail object for 
notification (eg kronolith events)

In function getConfig() of Horde_Core_Factory_Mail username and 
password are set in case of smtp transport
         /* Add username/password options now, regardless of current value of
          * 'auth'. Will remove in create() if final config doesn't require
          * authentication. */

in function create() of Horde_Core_Factory_Mail code looks like

       if (strcasecmp($transport, 'smtp') === 0) {
             $transport = 'Smtphorde';
         } elseif (empty($params['auth'])) {
             unset($params['username'], $params['password']);
         }

Here, username and password are only removed if
  - transport is NOT set to smtp and
  - auth is EMPTY (not checking for false as set in mailer config)

In my case, transport is smtp and auth is FALSE

So, in further, Horde_Smtp->login() is called with an username set 
(with empty password)
and sending of notification fails with "Server denied authentication."
(despite setting "No authentication")