Did you ever try to get Sendmail (8.12.x) on SuSE Linux 8.1 accept autenticated SMTP sessions? It’s very easy – even with the out of the box versions of SASL and Sendmail! But if you try, it would be helpfull to know that you have to create a Sendmail-specific config file for SASL.
The file /usr/lib/sasl/sendmail.conf has to contain at least one valid method how Sendmail should check if the user and password are valid. In my case I use PAM and therefore it’s sufficient to have one line in it
pwcheck_method: PAM
Allowed methods are sasldb, passwd, shadow, PAM, kerberos_v4 or pwcheck
The only thing you need if you use PAM is the corresponding file in /etc/pam.d/ which is in this case named smtp
Update: Today I found some helpful information about SMTP AUTH http://www.jonfullmer.com/smtpauth/.