The mail relaying module documentation that Doruk has mentioned is not at all relevant to this particular issue. You do not need that module for normal mail service, or to get rid of this error. You should not refer to that particular page at all for installation and initial configuration advice.
I don't have any servers with Sendmail handy, so I can't tell you specifically how to correct this sendmail error.
The name server error is super easy to fix, though: edit /etc/resolv.conf and add 127.0.0.1 as a nameserver.
I am wondering, however, why you've opted to install Virtualmin manually, if you're a newbie? It is incredibly challenging and time-consuming to setup a full-featured virtual hosting system (which is what Virtualmin manages). We provide an install script that does all of that configuration for you automatically on our download page at http://www.virtualmin.com/download
It sets up all of the components you need, and they will all Just Work when the installation has completed. You're currently nowhere close to getting a fully functional Virtualmin system, even after you've fixed these two little errors; you'll have a couple dozen other configuration changes to make even once these are fixed, and most of them are far more complex than these two.
I strongly suggest you not try to manually configure a virtual hosting system from scratch if you aren't an experienced system administrator. We have some documentation about a manual installation of Virtualmin, but it's not complete, and it expects a pretty high level of knowledge (because we expect non-technical users to use the install script we've provided).