Sendmail expects a lot from DNS and a "localhost"
entry in a DNS zone is one of them.  Suggestion
add to zone "domain name" a host record pointing
to loop back IP address.  BIND example:

	localhost	IN A	127.0.0.1

If that's not possible then edit /etc/hosts file.
Change line:

	127.0.0.1	localhost

to read:

	127.0.0.1	localhost localhost.domain.name

Have fun.