I notice that when I log in via sqwebmail, the banner at the top of the web page has now changes to read [EMAIL PROTECTED] (it used to read [EMAIL PROTECTED]), but when I compose a message, the FROM field still says [EMAIL PROTECTED]
Then change the From: field. The hostname file specifies the initial default for new accounts. The default for each new message is the same From: header as was entered for the last sent message.
Of course, I can edit the FROM field every time I compose an email message,
No, you don't need to edit it every time. Just once.
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