qmail can't find localhost

[Kezza]

Fetchmail is setup to poll my ISP and deliver mail locally. fetchmailrc is as follows:

poll pop.isp.com with proto POP3
user 'johndoe' there with password '********' is 'bilbo' here

However all mail fetched from my ISP is not delivered locally and a failure notice is send back to my ISP:

# Hi. This is the qmail-send program at morgoth.
# I'm afraid I wasn't able to deliver your message to the following addresses.
# This is a permanent error; I've given up. Sorry it didn't work out.

# <bilbo@localhost>:
# Sorry, I couldn't find any host named localhost. (#5.1.2)

Looking at /var/log/qmail-send/current:

@400000003df7c56a1bc828e4 status: local 0/10 remote 0/20
@400000003df7c5730a8346cc new msg 684161
@400000003df7c5730a835a54 info msg 684161: bytes 1170 from <johndoe@isp.com> qp 5126 uid 201
@400000003df7c5730aa8fb24 starting delivery 1: msg 684161 to remote bilbo@localhost
@400000003df7c5730aaa4efc status: local 0/10 remote 1/20
@400000003df7c5732790ab74 delivery 1: failure: Sorry,_I_couldn't_find_any_host_named_localhost._(#5.1.2)/
@400000003df7c5732790befc status: local 0/10 remote 0/20
@400000003df7c57327dabc64 bounce msg 684161 qp 5128
@400000003df7c57327dacc04 end msg 684161

Does the 4th line mean that qmail considers localhost as a remote host and hence tries to find bilbo@localhost somewhere outside my linuxbox?

[magnuson]

It certainly looks like it. I would check your /var/qmail/control/locals file and add localhost as a line in that file if it doesn't already exists. After that I would make sure that there is a line like

127.0.0.1 localhost

in your /etc/hosts file. Then give it another go.