Problems sending mail thru relay server to another local server

[BigDan55]

I am not sure if I setup the localhost daemon options for sendmail.cf and submit.cf for Solaris OS correctly.
I tried to setup both to go thru the localhost first then go to the email relay server. This seems to be working correctly but when I go to a server on the same network with the same sendmail configuration it rejects the emails.

porting-MTA: dns; corp148mr3.mcgraw-hill.com

Final-Recipient: rfc822;appmgr1@mhehts-qadb.mcgraw-hill.com
Action: delayed
Status: 4.0.0 (temporary failure)
Diagnostic-Code: smtp; 4.4.2 - Bad connection 'timeout' (delivery attempts: 0)
Will-Retry-Until: 20 Aug 2009 13:54:48 -0400

sendmail.mc file:

divert(0)dnl

VERSIONID(`@(#)main.mc 1.5 (Sun) 08/10/00')

OSTYPE(`solaris8')dnl

DOMAIN(`solaris-generic')dnl

DEFINE(`SMART_HOST', `internalsmtp.mhf.mhc')dnl

FEATURE(`genericstable')dnl
FEATURE(`masquerade_envelope')dnl
FEATURE(`nouucp', `nospecial')dnl

MAILER(`local')dnl
MAILER(`smtp')dnl

DAEMON_OPTIONS(`Addr=127.0.0.1, Name=MTA')
DAEMON_OPTIONS(`Name=MTA-v4, Family=inet')
DAEMON_OPTIONS(`Name=MTA-v6, Family=inet6')

submit.mc
divert(0)dnl
VERSIONID(`$Id: submit.mc,v 8.6.2.4 2002/12/29 03:54:34 ca Exp $')
define(`confCF_VERSION', `Submit')dnl
define(`__OSTYPE__',`')dnl dirty hack to keep proto.m4 from complaining
define(`_USE_DECNET_SYNTAX_', `1')dnl support DECnet
define(`confTIME_ZONE', `USE_TZ')dnl
define(`confDONT_INIT_GROUPS', `True')dnl
define(`SMART_HOST', `internalsmtp.mhf.mhc')dnl
FEATURE(`genericstable')dnl
FEATURE(`masquerade_envelope')dnl
FEATURE(`nouucp', `nospecial')dnl
dnl
dnl If you use IPv6 only, change [127.0.0.1] to [IPv6:::1]
FEATURE(`msp', `[127.0.0.1]')dnl