Why does sendmail think its host is named `localhost' is it named?

[Harry Putnam]

First... I'm sorry to get so off topic here, but I do have a query on
a gentoo list.   And have had several times recently.  Noone has
responded so far.

Jason Mitchell <jm at hcn.com.au> writes:
> I'm pretty certain it's nothing to do with named/DNS and everything to 
> do with your Gentoo box's config.
>
> Take a look at /etc/conf.d/hostname

If your familiar with gentoo you'll know that those files are the main
ones to set stuff like that, mine are set like I have set them many
times before but didn't have this problem.

My hostname is reader.local.net0

cat /etc/conf.d/hostname
  ------- 8< snip -------- 
  # /etc/conf.d/hostname
    # Set to the hostname of this machine
  HOSTNAME="reader"
  ------- 8< snip -------- 

cat /etc/conf.d/domainname:
  ------- 8< snip -------- 
  # OVERRIDE=1
  DNSDOMAIN="local.net0"
  NISDOMAIN="local.net0"
  ------- 8< snip -------- 

What really stumps me is the output of hostname and domainname
commands.
  hostname 
   reader

  domainname
   local.net

But here is the rub:

   hostname  --fqdn
    localhost
or
   hostname --long
    localhost    

I couldn't think of anything that would alter that but I'm a complete
novice with bind so I thought that might be it.

I thougt it might be this line from the zone file for my network:

  localhost.local.net0.        A       127.0.0.1

And I've tried commenting out.  When I do sendmail won't start and
keeps trying to find its hosts name.
  Darcy says its not the zone.file so I'm not sure where else to look.