If the Mail::Sendmail file is not detected as installed correctly, you would not be able to use SMTP as the Mail Transfer method for the installation (and so would not be able to use any feature that requires email). If your webhost is unwilling or unable to assist you, you could try manually installing the file in the /extlib/ directory as you've noted, making sure all files and directories are fully transferred (and named correctly), in ASCII mode to see if the module is then detected.
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