It works for me, but that is probably not enough for you, other than to tell you
not to give up. Just to make sure we are aware of potential version conflicts note that I am using e-smith 3.x.
Good luck, e-mail me directly if we are to go into more details. This was put together in a bit of haste hoping it could help you.
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As far as I remember I didn't do anything special, in fact I was surprised how easy it was to make it work. I have had two problems, none related to the ppp itself, I mention them here because they took a bit time to detect:
1) Some sites refused to accept mail because my mail configuration led them to belive I was illegally using them as a relay.
2) I sometimes seems to have problem getting to be recognized as an ATT customer when connecting from some of my machines to their web site. Haven't bothered me enough to spend time figuring out exactly why.
Anyhow, here are some notes on what I think I did. I first found the file account.txt on my windows machine, it is long, but starts out like this:
[Profile]
Description=Fname Lname
LoginName=123456789@worldnet.att.net
Password=funnytext-icantremember
CompanyLoginName=
CompanyPassword=
Domain Name=worldnet.att.net
DnsAddr1=204.127.129.1
DnsAddr2=204.127.160.1
Registration Code=1ABCDEF987
POP Name=mypopname
Email Address=mypopname@worldnet.att.net
POP Password=emailpasswd
POP Server=postoffice.worldnet.att.net
SMTP Server=mailhost.worldnet.att.net
NNTP Server=netnews.worldnet.att.net
Anything after this should be irrelevant.
Now I can't even remember where and how this information is entered into the e-smith server (someone can sure point you in the right direction) but here is the resulting relevant files from my e-smith server (please note that some or all of these files are rewritten by e-smith when you change configuration the correct way, if you have to hand edit you should do it in the templates, here we are interested in the result to see what and where you have problems):
[root@e-smith /etc]# cat /etc/diald.conf
mode ppp
connect "/usr/sbin/chat -v -f /etc/sysconfig/network-scripts/chat-ppp0"
device /dev/modem
speed 115200
modem
lock
crtscts
local 0.0.0.0
remote 0.0.0.0
dynamic
defaultroute
pppd-options name 123456789@worldnet.att.net
include /etc/diald.filter
I think the pppd-options name is very important.
The chap-secrets and pap-secrets I have are:
[root@e-smith ppp]# cat /etc/ppp/chap-secrets
# Secrets for authentication using CHAP
# client server secret IP addresses
123456789@worldnet.att.net * "funnytext-icantremember" *
[root@e-smith ppp]# cat /etc/ppp/pap-secrets
123456789@worldnet.att.net * funnytext-icantremember
[root@e-smith ppp]#
Looking at it now, I wonder why they have different structures, I probably never got the pap part right, but then who cares, what I have works.

Finally the chat script should work when the phone number is correct, though mine is slightly modified at the end.
[root@e-smith /etc]# cat /etc/sysconfig/network-scripts/chat-ppp0
'ABORT' 'BUSY'
'ABORT' 'ERROR'
'ABORT' 'NO CARRIER'
'ABORT' 'NO DIALTONE'
'ABORT' 'Invalid Login'
'ABORT' 'Login incorrect'
'' 'ATZ&C1&D2'
'OK' 'at&v'
'OK' 'atw3'
'OK' 'ATL0M0DTW221-2288'
'STATION ID' ''
I wonder why I decided to wait for the STATION ID part, maybe it wasn't as easy as I remember? Now, the stock chat worked fine, but I wanted at some point to get the connect speed written in the log so I had to have the chat be satisfied a bit earlier than the stock version.