http://www.sendmail.org/compiling.html#SASL
There's what sendmail says.
Basically you add the lines:
APPENDDEF(`conf_sendmail_ENVDEF', `-DSASL')
APPENDDEF(`conf_sendmail_LIBS', `-lsasl')
to sendmail/devtools/Site/site.config.m4 (you may have to create the file)
In the sendmail/ directory, build the source:
sh Build
NOTE: If this is not the first build in this directory tree, and you have changed or created any of the configuration files in the devtools/Site directory since the last build, use the -c option ("sh Build -c") to clear the previous build configuration. This may be the case if you forgot the site.config.m4 file the first time, or if your distribution preinstalled sendmail without milter support.
But as always, I'd read the instructions from the horse's mouth before you take my word for it.