samba - Mar 2005 - XP Joining samba domain issue

Hello,

XP joins 3.0.12 PDC domain, but it puts all Xs in the smbpasswd file
and the  account is disabled:

xpname$:719:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX:[DW
]:LCT-00000000:

and of course after that during logon I get following error:

"Windows cannot connect to the domain, either because the domain
controller is down or otherwise unavailable, or because your computer
account was not found.  Please try again later."

Any clues?

Thank you for the help,
Matt