Many SMTP implementations do not fully implement the protocol. For example, some personal computer based SMTPs do not understand continuation lines in reply codes. These can be very hard to trace. If you suspect such a problem, you can set traffic logging using the -X flag. For example,
This logs a lot of data very quickly and should NEVER be used during normal operations. After starting up such a daemon, force the errant implementation to send a message to your host. All message traffic in and out of sendmail, including the incoming SMTP traffic, will be logged in this file.