samba - Oct 2006 - Samba 3.0.23/AIX5.3.03/Windows 2003 Server

We have a P520 running AIX 5.3.3. We installed Samba 3.0.23. A user is
using Windows 2003 Server. We are having an issue with the Windows
server and Samba
on authentication. We use the "Send NTLM response only" in the Network
Security: LAN Manager authentication level Properties (this is set by
our security department) and the user on the Windows Server keeps
getting an error. The error is:
 
\\hostname is not accessible. You might not have permission to use this
network resource. Contact the administrator of this server to find out
if you have access permissions.
 
If we change the setting to something else, it works.  We can not change
the setting. 
 
Is there a problem with Windows 2003 server and Samba?
How can I fix this problem?
 
Thanks

Earnest Massey 
Sr. Unix Admin 
(972)946-9107 office 
(972)948-5021 mobile