Content:
553 relay.domain.net config error: mail loops back to myself 554 <user@domain.net>... Local configuration errorand both hints didn't solve your problem?
So here is another hint what might be wrong: You use a
LOCAL_RULE_0in your sendmail.mc (which is S98 in sendmail.cf)? This rule is evaluated before the local recognition of S0 happens. So if you use some rule here, which (by accident) also matches your local host but doesn't resolve to local, you have a problem. Try to debug that address and see where it fails (where it gets resolved to another mailer than local).