this is whats in my .cf file concerning smtp

[Jason Balicki]

>O DaemonPortOptions=Port=smtp,Addr=192.168.1.126, Name=MTA

If I my understanding of sendmail is correct, this means
that sendmail is listening on 192.168.1.126:25 ONLY,
and not on localhost.

in your log it appears it's trying to relay a message
to 127.0.0.1 which is the localhost ip address, and
it's getting "connection refused" -- that's not good.

We need to get it listening on BOTH.

--J(K)