Sendmail SASL Auth problem

[dimon at intellinetinc.com]

Hi,

I have a problem sending mail using sendmail SASL Authentication. I'm using 
saslauthd -a pam for authentication. pam module is pam-pgsql Users can login to 
Cyrus IMAPD and receive their mail using MS Outlook Express but they can't send 
mail. The accounts setup to authenticate to mail server using the same settings 
(username and password) as for incoming mail (Cyrus IMAPD).

When I hit reseive button Authentication screen pops up, I enter valid user 
name and password and this record appers in the maillog:

Jun 13 10:26:40 mail sm-mta[4930]: h5DGQd4D004930: win2k.intellinetinc.com 
[139.142.54.35] did not issue MAIL/EXPN/VRFY/ETRN during connection to MTA

And if I run saslauthd -a pam -d

saslauthd[4982] :main            : num_procs  : 5
saslauthd[4982] :main            : mech_option: NULL
saslauthd[4982] :main            : run_path   : /var/state/saslauthd
saslauthd[4982] :main            : auth_mech  : pam
saslauthd[4982] :ipc_init        : using accept lock 
file: /var/state/saslauthd/mux.accept
saslauthd[4982] :detach_tty      : master pid is: 0
saslauthd[4982] :ipc_init        : listening on socket: /var/state/saslauthd/mux
saslauthd[4982] :main            : using process model
saslauthd[4982] :have_baby       : forked child: 4983
saslauthd[4983] :get_accept_lock : acquired accept lock
saslauthd[4982] :have_baby       : forked child: 4984
saslauthd[4982] :have_baby       : forked child: 4985
saslauthd[4982] :have_baby       : forked child: 4986
saslauthd[4984] :get_accept_lock : acquired accept lock
saslauthd[4983] :rel_accept_lock : released accept lock
saslauthd[4983] :do_auth         : auth failure: [user=dmitry] [service=smtp] 
[realm=] [mech=pam]
saslauthd[4985] :get_accept_lock : acquired accept lock
saslauthd[4984] :rel_accept_lock : released accept lock
NOTICE:  Adding missing FROM-clause entry for table "domains"
NOTICE:  Adding missing FROM-clause entry for table "domains"
saslauthd[4984] :do_auth         : auth success: [user=dmitry] [service=imap] 
[realm=] [mech=pam]
saslauthd[4984] :do_request      : response: OK
saslauthd[4986] :get_accept_lock : acquired accept lock
saslauthd[4985] :rel_accept_lock : released accept lock

In my sendmail.mc I have:
define(`confAUTH_MECHANISMS',`PLAIN LOGIN DIGEST-MD5 CRAM-MD5')dnl
TRUST_AUTH_MECH(`PLAIN LOGIN DIGEST-MD5 CRAM-MD5')dnl

Do I have to add something else to my sendmail.mc?

Please help ASAP
Thank you 
Dmitry