RedHat 5.2 system can't use security=user

[Paul Forgey]

I am trying to get samba-2.0.3 up on my RedHat 5.2 system.  I've gone
through the diagnosis.txt file, and test 3 fails -- none of the reasons
listed apply. This is consistent with a Win9x or WinNT client attempting
to connect.  

What's even more puzzling is the log.<clientname> file is created
when I attempt to connect, but is 0 length!

By the way, 1.9.x didn't give me any trouble on the same system with the
same configuration.

The error smbclient is giving me is:
/usr/local/samba/bin/smbclient -U paulf -L heavy
Added interface ip=10.0.0.1 bcast=10.255.255.255 nmask=255.0.0.0
Password: 
session setup failed: ERRSRV - ERRbadpw (Bad password - name/password pair
in a Tree Connect or Session Setup are invalid.)

My smb.conf is the smb.conf.default file modified to have
workgroup = WORKGROUP

With debug level 5, the log file actually has something in it:

[1999/03/27 23:43:44, 4] passdb/pass_check.c:pass_check(776)
  Checking password for user paulf (l=7)
[1999/03/27 23:43:44, 3] smbd/error.c:error_packet(138)
  error packet at line 781 cmd=115 (SMBsesssetupX) eclass=2 ecode=2
[1999/03/27 23:43:44, 3] smbd/error.c:error_packet(143)
  error string = No such file or directory
[1999/03/27 23:43:44, 5] lib/util.c:show_msg(459)

I've tried this on two different RedHat 5.2 installations, with the exact
same results, so I don't think I'm alone, however searching through the
list archives reveal nothing.

Help..?  Thanks! :)