[Samba] Cannot Change smbpasswd

[Sharpe, Annik A]

We are receiving the error:

machine 127.0.0.1 rejected the session setup. Error was : NT_STATUS_LOGON_FAILURE.
Failed to change password for {username}

We were told to add 127.0.0.1 to the hosts allow parameter however this causes us to get an error in Swat that says 

"Samba is configured to deny access from this client Check your "hosts allow" and "hosts deny" options in smb.conf" 

So we have the hosts allow empty at this time. Any suggestions?

April