Is your server behind a Cisco firewall with Authenticated SMTP configured?
I had tremendous trouble figuring out what was going on with my server once I’d enabled Authenticated SMTP.
It turned out the problem was with the SMTP fixup on our PIX firewall, which is supposed to help sort out some older security issues with Sendmail by only allowing a limited number of SMTP commands to pass through on port 25. This means that the EHLO command sent at the beginning of the SMTPAuth session never makes it through the firewall. Since the bugs in sendmail that the fixup is fixing are rather ancient and don’t apply to postfix, you should be able to safely disable the SMTP fixup on your firewall.
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