Right ... did you actually read
In your problem description I can't see anything
about having checked /etc/services...
Or a -h flag ... for that matter:
Quoting man syslogd
-h By default syslogd will not forward messages it
receives from remote hosts. Specifying this switch
on the command line will cause the log daemon to
forward any remote messages it receives to forward-
ing hosts which have been defined.