Hello,
I am not a sendmail expert, but in order to set mine up, I had to get DNS working first. I thought that I could get away with sendmail using the /etc/hosts file, but in the end, I had to get DNS setup first, with MX records.
When I telnet into my linux box on port 25, from the linux box, it also says 220 localhost.localdomain...... so I do not think that is the problem.
It is possible to turn on massive debugging in sendmail, and it is also possible to test among local accounts. I'll try to be around to help you out with this.
Christian
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