You want your SMTP server to relay mail from arbitrary places, without creating an open relay.
Use SMTP authentication. To set up the server:
Find this line in /etc/mail/sendmail.mc:
and change it to:
The default setting restricts sendmail to accepting connections only from the same host, for security; now it will accept connections from elsewhere.
Make sure this line in /etc/mail/sendmail.mc appears uncommented (i.e., it is not preceded by the comment symbol dnl):
TRUST_AUTH_MECH(`EXTERNAL DIGEST-MD5 CRAM-MD5 LOGIN PLAIN')
If you have changed /etc/mail/sendmail.mc, rebuild your sendmail configuration file and restart sendmail.
 You'll need the RPM package sendmail-cf installed to do this. Note also that some Linux distributions put sendmail.cf in the /etc/mail directory.
Rebuild the configuration:
# m4 /etc/mail/sendmail.mc > /etc/sendmail.cf
# /etc/init.d/sendmail restart
Establish an account for SMTP authentication, say, with username mailman:
# /usr/sbin/saslpasswd -c mailman Password: ******** Again (for verification): ********
Your mail server should now be ready to do SMTP authentication. To set up the email client:
Configure your mail client to use SMTP authentication for outbound email, using either the DIGEST-MD5 (preferred) or CRAM-MD5 authentication types.
Your client might also have an option nearby for a "secure connection" using SSL. Do not turn it on; that is a separate feature.
Try sending a test message via relay: address it to a domain considered non-local to your server. Instead of replying with a "relay denied" error (which you should have gotten previous to this setup), you should be prompted for a username and password. Use the mailman account you established previously. The mail message should get sent.
An SMTP server accepts Internet email. There are two kinds of email messages it may receive:
Intended to be delivered to a local user on that host. This mail usually arrives from other mail servers.
Intended to be forwarded to another host for delivery. This mail usually comes from email programs, such as Pine and Ximian Evolution, configured to use your SMTP server to send mail.
A mail server that forwards non-local mail is called a relay. Normally, you'll want your SMTP server to accept local mail from anywhere, but restrict who may use your server as a relay for non-local mail. If you don't restrict it, your SMTP server is called an open relay. Open relays invite trouble: spammers seek them out as convenient drop-off points; your machine could be co-opted to send unwanted email to thousands of people. Say goodbye to your good Internet karma... and you will shortly find your mail server blacklisted by spam-control services, and hence useless. In fact, you might come home one day to find your ISP has shut down your Net access, due to complaints of mail abuse! You really don't want an open relay.
ISP mail servers normally accept relay mail only from addresses on their network, restricting them to use by their customers. This makes good business sense, but is inconvenient for mobile users who connect to various ISPs for Net access at different times. It's a pain to keep switching email program settings to use the different required relays (or even to find out what they are).
Our recipe demonstrates how to set up your SMTP server to get around this inconvenience, by requiring authentication before relaying mail. Thus, a single SMTP server can accept non-local mail no matter where the client is connected, while still avoiding an open relay. One caveat: the email clients must support SMTP authentication, as do Evolution, Pine, the Mail program of Macintosh OS X, and others.
Our recipe depends on two lines in /etc/mail/sendmail.mc. The first, once you disable it, allows sendmail to accept mail from other hosts; by default, it only listens on the network loopback interface and accepts mail only from local processes. The second line, once enabled, tells sendmail which authentication mechanisms to accept as trusted: that is, if a client authenticates using one of these methods, it will be allowed to relay mail.
When you send your test message, if your mail client claims the server does not support SMTP authentication, try this on the server:
# sendmail -O LogLevel=14 -bs -Am EHLO foo QUIT # tail /var/log/maillog
and look for any enlightening error messages.
This configuration by itself does not secure the entire SMTP session, which is still a plaintext TCP connection. So don't use simple password authentication, as your passwords can then be stolen by network eavesdropping. By default, sendmail accepts only the DIGEST-MD5 and CRAM-MD5 authentication methods, which do not send the password in plaintext.
It is also possible to configure sendmail to use SSL to protect the entire SMTP session. If you understand the security properties and limitations of the authentication mechanisms mentioned above, and consider them inadequate for your application, this might be a necessary step to take. However, don't do it out of some notion to "protect" the content of your email. Unless you have a closed system, your email will be further relayed across other networks on the way to its destination, so securing this one hop is of little value. For more security, use an end-to-end approach, encrypting messages with GnuPG, PGP, or S/MIME (see [Recipe 8.1] through [Recipe 8.8]).
Learn more about SMTP authentication at ftp://ftp.isi.edu/in-notes/rfc2554.txt, and sendmail's particular implementation at http://www.sendmail.org/~ca/email/auth.html. The SASL RFC is at ftp://ftp.isi.edu/in-notes/rfc2222.txt.