The instructions provided for setting up the Opera M2 client are for a very old version of Opera (I'm currently using Opera 9.21). Also I found Plaintext doesn't work, at least for the SMTP. Auto does work for both Pop3 and SMTP. I'll add any modifications here as I test it. Here are the updated instructions:
1. Click Tools -> Mail and Chat Accounts -> Add -> Select "Regular email (pop)". Click Next.
2. Type your name (or however you want to be seen in your emails) in the "Real name" box, your Yahoo email address in the "E-mail address" box, and organization or company, if you want, in the "Organization" box. Click Next.
3. Type your username in the "Login name" box and type your Yahoo password in the "Password" box. Click Next.
4. Type "127.0.0.1" in the incoming and outgoing "Server" fields. Click Finish.
*In Opera go to Tools -> "Mail and chat accounts", and click on your Yahoo account. Click Edit.
Servers tab -> Incoming POP server -> Authentication -> Leave it "Auto"
Servers tab -> Outgoing SMTP server -> Authentication -> Select "Auto"
Also in the "Outgoing SMTP server" fill in username and password.
On General tab you may edit as desired, and on the Incoming and Outgoing tabs you make selections according to your preferences, including a signature.