Do a search in sendmail.cf for 'SmtpGreetingMessage'.
Change from ...
O SmtpGreetingMessage=$j Sendmail $v/$Z; $b
O SmtpGreetingMessage=$j $b
then a simple killall -HUP sendmail should fix it. (This works on RedHat 8)
End result when you try to telnet is ...
# telnet localhost 25
Connected to localhost.
Escape character is '^]'.
220 localhost ESMTP Wed, 11 Jun 2003 10:50:07 +1000
221 2.0.0 localhost closing connection
Connection closed by foreign host.
NB: localhost names changed to protect the inane