--freebsd 5.4
--samba 3.0.20

1) when users are trying to connect from a windows
machine (XP) they get prompted for username and
password but it wont authenticate.  

2) when I try to use smbpasswd to set password I get
this error message:
Failed to find entry for user bill.
Failed to modify password entry for user bill


3) should I comment this line in smb.conf?
encrypt passwords = yes

4) When users try to authenticate, why does it not
show up in the log.smb file?

when i run testparm --everything looks okay.

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