can send via telnet, not otherwise (sendmail)

[The Derfer]

I have two hosts: a DB server (no DNS) which sends to a relay or
"smart" host and the relay itself.
I can telnet to the relay via port 25 and send (and the mail actually
gets there):

[myname@dbserver ~]$ telnet mailhost 25
Trying 10.156.80.131...
Connected to mailhost.
Escape character is '^]'.
220 localhost.localdomain ESMTP Sendmail 8.13.8/8.13.0; Thu, 12 Nov
2009 10:30:2 3 -0500
HELO dbserver
250 localhost.localdomain Hello dbserver [10.156.90.13], pleased to
meet you
MAIL FROM:myn...@dbserver.com
250 2.1.0 myn...@dbserver.com... Sender ok
RCPT TO:myn...@gmail.com
250 2.1.5 myn...@gmail.com... Recipient ok
DATA
354 Enter mail, end with "." on a line by itself
This is a test
.
250 2.0.0 nACFUNo4004197 Message accepted for delivery
QUIT
221 2.0.0 localhost.localdomain closing connection
Connection closed by foreign host

Proof that it was sent:

Nov 12 10:31:57 mailhost sendmail[4363]: nACFUNo4004197:
to=myn...@gmail.com, delay=00:00:17, xdelay=00:00:04, mailer=esmtp,
pri=120015, relay=gmail-smtp-in.l.google.com. [209.85.212.40],
dsn=2.0.0, stat=Sent (OK 1258040075 6si1723704vws.48)

But if I send via the command line (Mail myn...@gmail.com) something
else happens.
Here is the log from dbserver (nothing turns up in mailhost's logs):

Nov 12 10:47:21 localhost sendmail[8754]: NOQUEUE: SYSERR(myname): can
not chdir(/var/spool/mqueue/): Permission denied

From the command line (after attempting to send):

[myname@e1198pdb3 ~]$ can not chdir(/var/spool/mqueue/): Permission
denied
Program mode requires special privileges, e.g., root or TrustedUser.

But .. even if I send it as root, news is not so good:

Nov 12 10:51:54 localhost sendmail[10379]: nACFpson010379: from=root,
size=42, class=0, nrcpts=1,
msgid=<200911121551....@localhost.localdomain>,
relay=root@localhost
Nov 12 10:51:59 localhost sendmail[10381]: nACFpson010379: SYSERR
(root): mailhost config error: mail loops back to me (MX problem?)
Nov 12 10:51:59 localhost sendmail[10381]: nACFpson010379:
to=myn...@gmail.com, ctladdr=root (0/0), delay=00:00:05,
xdelay=00:00:05, mailer=relay, pri=120042, relay=mailhost
[10.156.80.131], dsn=5.3.5, stat=Local configuration error
Nov 12 10:51:59 localhost sendmail[10381]: nACFpson010379:
nACFpxom010381: DSN: Local configuration error
Nov 12 10:51:59 localhost sendmail[10381]: nACFpxom010381: to=root,
delay=00:00:00, xdelay=00:00:00, mailer=local, pri=31371, dsn=5.3.0,
stat=unknown mailer error 1
Nov 12 10:51:59 localhost sendmail[10381]: nACFpxom010381:
nACFpxon010381: return to sender: unknown mailer error 1
Nov 12 10:51:59 localhost sendmail[10381]: nACFpxon010381: to=root,
delay=00:00:00, xdelay=00:00:00, mailer=local, pri=32395, dsn=5.3.0,
stat=unknown mailer error 1
Nov 12 10:51:59 localhost sendmail[10381]: nACFpxom010381: Losing ./
qfnACFpxom010381: savemail panic
Nov 12 10:51:59 localhost sendmail[10381]: nACFpxom010381: SYSERR
(root): savemail: cannot save rejected email anywhere

[Patriot]

Your telneting into another system (relay) that is configured for sendmail
Command line is using localhost (db server) not configured for sendmail.

thats kinda how I see it.