This is your problem, I am sure you have figured this much out so far.pppd: using the noauth option requires root privilege
I don't have much(if any) experience with ppp servers, but I do have a bit with the clients. So here is my suggestion:
Go ahead and type chmod u+s /usr/sbin/pppd
now cd into /etc/ppp and check for an options file....check to make sure you don't have any pap options in there.
Check inside your pap-secrets file and add a
"" * "" *
if it isn't already there...that should get you connected...I hope....if not come on back and we'll figure something else out for ya!