sendmail(sendmail-8.12.10-1) running on RHEL 3.
STOP. RIGHT. THERE! This machine is SERIOUSLY OUT OF DATE!
Sendmail 8.12.10 was released 2003/09/17
, making it almost a decade old!
RHEL3 was released between 2003-10-22 and 2007-06-15 depending on the patch level and all versions are running kernel revision 2.4
The fact that your logs are showing your mail system trying to send to undisclosed recipients, which to me says spamming a list of BCC recipients, via an obvious spoof from address is a strong indication that your system has been compromised in some fashion. Without performing an investigation you won't know how. Given that the machine is so severely out of date, I question whether a thorough investigation would be worth the effort. This is a decision you will have to make. More importantly, running a public facing server, especially an email server requires a responsible commitment and this machine has clearly been neglected. Even if you were to wipe the machine out, rebuild it using current software, you would still have to decide if you are willing to spend the effort to manage it responsibly.