Setting up sendmail on ubuntu 8.10?
 

I want to setup a sendmail server on ubuntu so that a mail can be sent to the users mailboxes?
Whats minimum configuration needed to be done?

sendmail.mc file should be edited to accept and relay mails from other hosts than localhost.
You can then redirect this configuration using m4 macro to sendmail.cf.

What least entries needed for the sendmail.mc file to be enabled?

Thats what I said. You will need to allow relaying from hosts other than localhost as well. You will have to look out for the option in the file. It is documented and says what the option is for.
Otherwise it will accept mails from localhost.

Just my 2cents:
go for postfix or exim