I guess that you have another MTA Installed on your system, in this case it looks like POSTFIX is installed.
So stop the service of the MTA that its installed and then unistall the MTA, then removed the sendmail symbolic links, usually located in /usr/lib/sendmail and /usr/sbin, and then create the symbolic links but now pointing to the qmails's sendmail.
You have to doble check that exim, exim4, sendmail arenot instatlled as well.
After this restart, your service and try again to telnet to your mail server in port 25 and you shuold have something like:
% telnet localhost 25
Trying 127.0.0.1...
Connected to localhost.
Escape character is '^]'.
220 mail.yourdomain.com ESMTP
then type ehlo localhost
250-mail.yourdomain.com
250-AUTH LOGIN CRAM-MD5 PLAIN
250-AUTH=LOGIN CRAM-MD5 PLAIN
250-STARTTLS
250-PIPELINING
250 8BITMIME
I hope this helps you :)
Regards,
Victor Guerra.
