[Samba] /etc/samba/smbpasswd keeps changing - pulling my hair out

[Mark Hellman]

This is really bizarre.
Running Samba 3.0.4 on SuSE 9.1. The password backend is smbpasswd.

Each user has a system and samba account and everything has worked as
expected until recently. But now, every new user I create is unable to log
into Samba server (older users are still able to log in).

Inspecting log.smbd the following messages are displayed:

[2004/07/22 11:44:56, 2] smbd/sesssetup.c:setup_new_vc_session(602)
  setup_new_vc_session: New VC == 0, if NT4.x compatible we would close all
old resources.
[2004/07/22 11:44:56, 2] smbd/sesssetup.c:setup_new_vc_session(602)
  setup_new_vc_session: New VC == 0, if NT4.x compatible we would close all
old resources.
[2004/07/22 11:44:56, 2] auth/auth.c:check_ntlm_password(312)
  check_ntlm_password:  Authentication for user [seara] -> [seara] FAILED
with error NT_STATUS_NO_SUCH_USER
[2004/07/22 11:45:04, 2] auth/auth.c:check_ntlm_password(312)
  check_ntlm_password:  Authentication for user [andreiaferreira] ->
[andreiaferreira] FAILED with error NT_STATUS_WRONG_PASSWORD
[2004/07/22 11:45:07, 2] smbd/server.c:exit_server(568)
  Closing connections


But what is most bizarre is that the /etc/samba/smbpasswd entry for this
user is modified after this logon attempt! The password field is all XXed:

andreiaferreira:1001:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[U          ]:LTC-36635F00:

If I reset the password by running smbpasswd -a andreiaferreira, the entry
becomes:

andreiaferreira:1001:58DF4B83F19C0B91AAD3B435B51404EE:050B689D4906009845CE4D4E17AA6AF7
[U          ]:LTC-36635F00:

BUT the next time this user tries to log into the server she is denied and
the password entry is again XXed:

andreiaferreira:1001:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[U          ]:LTC-36635F00:

I even tried to  
     chmod a-w /etc/samba/smb.conf
just to see what happened. But it was still modified!

This happens using Windows XP Home and also using smbclient from a Linux
host.
What is going on here?! Why the NT_STATUS_WRONG_PASSWORD when the password
is correct? How the hell the password in smbpasswd can be XXed by Samba
after a logon attempt?

The [global] section of my smb.conf is as follows:

[global]
        workgroup = SEARA-LX
        log level = 2
        syslog = 0
        preferred master = Yes
        domain master = Yes
        wins support = Yes

I would be grateful if anyone can enlighten me on this.


Mark