FC5 mail and localhost

[Gregory P. Ennis]

List,

I am trying to use FC5 for a gateway machine with an external eth0
(XXX.XXX.XXX.XXX) and internal eth1 (10.0.0.135).  I am having some
difficulty setting up sendmail.  

I have installed essentially the same sendmail.mc that I have used with
an FC4 gateway, but the FC5 system does not appear to be recognizing
localhost properly.

For instance when I "telnet localhost 25" I connect to sendmail, but
when I try to send a command like HELP I get a response "550 5.0.0
Access denied" or when I try to use "mail -v -s 'Test' root" I receive
"550 5.0.0 Access denied".  

Surprisingly, when I telnet 10.0.0.135 25 (from the local machine) I
connect to sendmail and am able to manually communicate with sendmail
and even send a message.  When I "telnet (XXX.XXX.XXX.XXX) 25" (from an
external source) I am able to connect to sendmail and send a piece of
mail manually.  

If my sendmail.mc, or host files are faulty I can not find the error.
Does anyone know if this is a bug related to FC5, sendmail, and
localhost?

Greg Ennis