samba - Dec 2002 - NT Password did not match ! Defaulting to Lanman

We recently upgraded one of our AIX servers (AIX 4.3.3 on new hardware), on
which we share documents via a SAMBA share, the samba version is at 2.0.6.
Since that upgrade I have been getting calls from clients on multiple
subnets having difficulty connecting, slow download/upload speeds, and
getting their Microsoft domain accounts locked up.  Upon review the log
files for those complaining, I see multiple entries of: 

[2002/10/14 09:24:38, 1] smbd/password.c:server_validate(1127)
  password server PW_SERVER rejected the password
[2002/10/14 09:24:38, 0] passdb/smbpass.c:startsmbfilepwent(50)
  startsmbfilepwent: unable to open file /usr/local/samba/private/smbpasswd
[2002/10/14 09:24:38, 0] passdb/passdb.c:iterate_getsmbpwnam(147)
  unable to open smb password database.
[2002/10/14 09:24:38, 0] smbd/reply.c:reply_sesssetup_and_X(771)
  NT Password did not match ! Defaulting to Lanman
[2002/10/14 09:24:38, 0] passdb/smbpass.c:startsmbfilepwent(50)
  startsmbfilepwent: unable to open file /usr/local/samba/private/smbpasswd
[2002/10/14 09:24:38, 0] passdb/passdb.c:iterate_getsmbpwnam(147)
  unable to open smb password database.

It will repeat these messages quite a number of times and sometimes will
connect them up with the default user account (NOBODY), sometimes lock up
their account; or they client will give up the attempt.

Then they may try again later and get connected immediately - this is the
part that has me very confused.

[2002/10/14 11:33:09, 1] smbd/service.c:make_connection(488)
  PC-NAME (123.123.123.123) connect to service IMAGES as user johndoe
(uid=999
9, gid=999) (pid 48446)
[2002/10/14 11:38:31, 1] smbd/service.c:close_cnum(514)
  PC-NAME (123.123.123.123) closed connection to service IMAGES

Is it just a contention issue?

Here is the relevant part of my smb.conf:

[global]
   printing = aix
   printcap name = /etc/qconfig
   load printers = no
   dead time=10
   print command = lpr -r -h -P %p %s
   password server=cgownt01
   security=server
   comment = Unix Server
   guest account = nobody
   workgroup=nppdnet
   remote announce= 161.201.16.255
   wins server =161.201.16.10
   hosts allow = 161.201. localhost
   interfaces = 161.201.16.7/24
   server string=%h SMB file services
   domain master=no
   local master=no
   preferred master=no
   log file = /usr/local/samba/log/log.%U
   log level = 1
   max log size = 50
[IMAGES]
   comment = Unidata Images directory
   path = /IMAGES
   preserve case = no
   default case=upper
   public = yes
   browseable = yes
   read only = no
   printable = no
   force directory mode=0775
   create mask = 0664
   write list=@uniprod

The problem seems to be growing worse (or people are just being more vocal
in voicing their displeasure).

I've read through the documentation and have been watching the mail list for
a while now and haven't come any closer to resolving the issue.  Any help
would be appreciated.

Thomas J. Hartman                 		tjhartm@nppd.com
Operating Systems Analyst     		Voice:(402)563-5247
Nebraska Public Power District         	Fax:(402)563-5402