I have followed the same steps you have.
The php script that I am using to send the email is entering the email address submited in a form field as the from header but it's not working out...restarted sendmail, rebuilt sendmail.cf with resolvable domain - no fix.
This is from the sendmail.cf:
dnl MASQUERADE_DOMAIN(veit-americas.com)dnl
this is the nosend:
Final recipient
legitimate@myaddress.net (obviously edited for posting)
Reason for failure 550 <apache@localhost.localdomain>: Sender address rejected: User unkown (C003)
Remote mail server mail2.zoneedit.com
Reporting mail server localhost.localdomain