samba - Oct 2002 - PDC operation: "controller cannot be located" error

Hi all,

I am running Samba 2.2.5 on a RedHat 7.3 system. I am attempting to
establish this server (thor) as the PDC on my private network of (currently)
2 machines. The first machine
I want to connect is an NT client, mercury. I followed instructions from
various web resources, the PDC howto, etc and have this as my smb.conf file:

[global]
        workgroup = THORDOMAIN
        netbios name = THOR
        server string = Samba PDC %v %h
        encrypt passwords = yes
        domain logons = yes
        logon script = netlogon.bat
        share modes = no
        os level = 64
        local master = yes
        domain master = yes
        preferred master = yes
        domain admin group = @admins
        security = user
        smb passwd file = /etc/samba/smbpasswd
        hosts allow = 192.168.1., 127.
        max log size = 50
        unix password sync = yes
        passwd program = /usr/bin/passwd %u
        passwd chat = *New*password* %n\n *Please*retype*new*password* %n\n
*password*successfully*updated*
        logon home = \\%L\%u
        logon drive = H:
        logon path = \\%L\Profiles\%u
 #       add user script = /usr/sbin/useradd -d /dev/null -g machines -s
/bin/false -M %u
[homes]
        comment = Home Directories
        path = %H
        writeable = Yes
        valid users = %S
        create mode = 0664
        directory mode = 0775
[netlogon]
        comment = Network Logon Services
        path = /home/samba/netlogon
        read only = yes
        guest ok = no
        write list = @adm
[Profiles]
        path = /home/samba/profiles
        browseable = No

The netlogon and profiles dirs were created, permissions set. Netlogon.bat
is in /usr/bin. I created an account for my NT box:

# useradd -g machines -d /dev/null -s /bin/false mercury$
# passwd -l mercury$
# smbpasswd -a -m mercury

When I try to logon to the domain from mercury I get an error msg on my NT
box which says "the
domain controller for this domain cannot be located."

My log.smbd file says:

[2002/10/30 10:20:28, 2] smbd/server.c:open_sockets(215)
  waiting for a connection
[2002/10/30 10:46:23, 3] smbd/oplock.c:init_oplocks(1211)
  open_oplock_ipc: opening loopback UDP socket.
[2002/10/30 10:46:23, 3] lib/util_sock.c:open_socket_in(813)
  bind succeeded on port 0
[2002/10/30 10:46:23, 3] smbd/oplock_linux.c:linux_init_kernel_oplocks(298)
  Linux kernel oplocks enabled
[2002/10/30 10:46:23, 3] smbd/oplock.c:init_oplocks(1241)
  open_oplock ipc: pid = 3008, global_oplock_port = 32773
[2002/10/30 10:46:23, 3] lib/access.c:check_access(318)
  check_access: no hostnames in host allow/deny list.
[2002/10/30 10:46:23, 0] lib/access.c:check_access(331)
  Denied connection from  (65.241.90.144)
[2002/10/30 10:46:23, 1] smbd/process.c:process_smb(869)
  Connection denied from 65.241.90.144
[2002/10/30 10:46:23, 3] smbd/sec_ctx.c:set_sec_ctx(313)
  setting sec ctx (0, 0) - sec_ctx_stack_ndx = 0
[2002/10/30 10:46:23, 2] smbd/server.c:exit_server(461)
  Closing connections
[2002/10/30 10:46:23, 3] smbd/connection.c:yield_connection(48)
  Yielding connection to
[2002/10/30 10:46:23, 3] smbd/connection.c:yield_connection(61)
  yield_connection: tdb_delete for name  failed with error Record does not
exist.
[2002/10/30 10:46:23, 3] smbd/server.c:exit_server(495)
  Server exit (connection denied)

One part I do not understand is that it says
    Denied connection from  (65.241.90.144)

If this is an IP address, I have no idea who this connection attempt is
from, I am on a private network with no mapping from our router. So this
must be mercury trying to connect. Perhaps to someone with a deeper
knowledge of samba this log file might point to a severe configuration error
I may have, why mercury can't locate the PDC. Yes, the systems can ping
eachother. Is my config file set up correctly? Your help is greatly
appreciated.

Rich