I've had to deal with Yahoo on a few occasions, and as a host they are terrible... but, I did get formmail working, and it is currently working. From what I remember, we had to set the sender to get it working.
I just checked it now and it is still working.
I have seen where hosts will have different configurations of various settings depending on what server you are on. I'd say you should try sending mail via basic scripting, and determine if sendmail works. If you can't get it working, call Yahoo and ask them to give you an example of a script that works, so that you can see what they require.