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Sendmail seems to be relaying using localhost 127.0.0.1 to send mail out

Using Redhat Enterprise Linux 4ES and sendmail to send mail out. Recently just changed the host name of the server . Now, when ever mail is sent out it tries to relay mail out using local host

msgid=<1205263810.8831@mail01.tdc>, relay=root@localhost

Have changed thr host file to ensure the IP address of the machine is the first entry and 127.0.0.1
Still using 127.0.0.1 to relay
Any ideas as to why this shoudl be and what else need changing. Have chandd the Local Domain ensureing localhost is not the firsat entry in this file. Re-booted , and still sendmail tried to use localhost to relay.

Solution: Sendmail seems to be relaying using localhost 127.0.0.1 to send mail out

The actual problem was a firewall issue, found out as we re-installed the OS to find we couldnt get out to the internet to get updates, tunrs out the ISP had missed something to allow acess. Once fixed, sendmail worked happily