samba - Feb 2001 - 2.0.7, OpenBSD 2.8, Win 98 clients complain with "File System Error"

Hi,
this is a problem that I haven't solved yet with a recent and first time 
install on OpenBSD of Samba.
I can log in fine and browse the shares using Win98 clients.Using smbclient 
locally I can do all the things  listed below fine.

Basically I can create a file/directory and I can open an existing file 
and append data to it. But if I try to rename, delete or even copy it on 
to the local file system I get "Cannot <action> file: File System
Error
(1026)". When I create a directory, I am unable to open it. I get "The
folder
'\\path' does not exist".

The OS is OpenBSD 2.8 running Samba 2.0.7. It was compiled with gcc 2.95.3. 
 I would feel that this isn't a config problem as I have used similar
configs
else where on Linux with no problems. I have checked maillist archives and 
the web to no solutions. 

Thanks