I took a look at Apple's source code changes to Cyrus IMAP, which is working with Open Directory. I did a diff against the original 2.2.12 sources using FileMerge and I see that Apple added code to look in Open Directory for user name and pass. So this explains why IMAP works but sendmail does not.
A pertinent question at this point is: Has anyone ported sendmail to Mac OS X Open Directory, similar to what Apple did with IMAP? If so, it would save me from trying to do it myself. I can probably merge the IMAP additions into sendmail, and this would allow Workgroup Manager accounts to send SMTP using SASL authentication.
Alternatively, the easier path seems to be to create a separate database for sendmail SASL, which isn't too far from what they recommend anyway.
No comments from anyone?
Thanks for your post.
I don't have an answer to your question, but I am working on something similar. I am also using sendmail 8.14.7 but I prefer Dovecot, vs other imap servers.
When you do resolve your issue, I would be interested in seeing your fix action.