samba - Jan 2005 - win host is not able to connect

hi list,

ill using samba with pam an mysql
with the following smb.conf:


[global]
  log file = /var/log/samba/log.%m
  log level = 10
syslog = 10
workgroup = Workgroup
server string = samba file services at WORKGROUP-NAME
        security = User
        #must be set to 'no' to use PAM
        encrypt passwords = No
       # update encrypted = No
        allow trusted domains = Yes

[samba]
        path = /home/samba
        valid users = root,user1
        writeable = Yes

========================now, i can auth with `smbclient -L localhost -U user1 -W
WORKGROUP` without any problems and
 pam is working fine.
But when i try to connect with a windows machine (same workgroup and user) the 
host is not able to connect to that server. only when i set
 encrypt passwords = Yes 
but in that case samba did not use the pam auth, only the own smbdpassdb.

Do i have to set another config option to?

thanks
luke