sendmail howto stop access

[Sandipan Panigrahi <pani@frontiernet.net>]

How can I setup sendmail so that it will only allow mails sent from
my local machine to be sent out and not any from other locations ?

A friend of mine had his server shutdown because someone used his
machine to spam. He runs a BSD system and he has been extremely careful
with it's security. He claims that somebody used his "sendmail" daemon.

If this is possible, how can it be prevented ?

Thanks,
sandipan