SASL problems while moving old Debian Sarge install.

I was wondering if anyone can shed a bit of light on this issue;

In last few days I've moved an old Debian Sarge mail server from physical box to ESXi server. Of course, none of the VMware's auto-virtualization tools work on Sarge, so I installed a fresh install of Sarge guest, made a complete filesystem tarball from original and unpacked it to new, with maintaining permissions, of course.

After tweaking stuff like new partition layout, kernel module options, etc, to fit the "old" install to new hardware, the system successfully booted, and all seemed normal. The external IP of the mail server was trunked to ESXi box, so on flick of the switch, virtual guest gets all networking configuration of physical host. No DNS hassle.

But after plugging out the old physical box and flicking the switch on network of the new guest, the internet connection works as expected, however mail doesn't. It's a postfix system, and while trying to send mail from on-board squirrelmail, I get
Code:
Fatal: no SASL authentication mechanisms
in /var/log/mail.err, incoming mail also doesn't work.

I don't get it, the configuration is virtually the same, the IP is same, host generated keys are same. Googling found few threads but no solution. After unsuccessful 30-min repair try, I "plugged out" the virtual guest and plugged in the physical server. There are no errors on physical server.

I can list the postfix configuration here tomorrow. Any thoughts are much appreciated.
 
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