I’ve just found and re-opened the old issue SMACK-346. Let’s see if we can squash the bug, also note that there is a typo: s/no_acceptable/not_acceptable/
Looking at 197548b5, the relevant commit for SMACK-346, reveales that it was at first forbidden, but then got changed to no(t)_acceptable. XEP-95 4.2 specifies forbidden, this was obvisouly what the inital author of the code had in mind. XEP-65 5.3.1 Example 13 mentiones not-acceptable.
I tend to favor not_acceptable right now. But this should be discussed first.
Now I came to the conclusion that ‘forbidden’ in this case is right and that the intial bug report mixed up Socks 5 Bytestream rejection with Stream Initiation rejection. My proposed fix is https://github.com/Flowdalic/Smack/commit/c063fb137689a987bb7a589443ac4ac74e136d c3 and will go into 4.0.1 if there are no objections.