I have similar problem.
After upgrading Ubuntu from 9.10 to 10.04 sharing commands was not working 
properly.
I can't share throw context menu in Nautilus - have same error as is in bag 
descrition.
Also I can't share throw command line:

    net usershare add NAME PATH USER

I get error:

    'net usershare' returned error 255: net usershare add: cannot convert name 
"USER" to a SID. The connection was refused. 
    Maybe smbd is not running.

But i can sharing throw command line without additional parameters:

    net usershare add NAME PATH

Samba service and network sharing working properly (exclude adding sharing 
throw command and context menu).
Also i can manualy edit smb.conf or create/delete share-config in 
/var/lib/samba/usershares - all will be work.

I try UFW enable and disable - this not help. Also i have instaled all
needed package (i think).

Also befor upgrading Ubuntu i have group "sambashares" for
/var/lib/samba/usershares, but after upgrading this group was  reset to
root ??? I do not know why.

Linux 2.6.32-22-generic #33-Ubuntu SMP Wed Apr 28 13:27:30 UTC 2010 i686
GNU/Linux

----------------------
May be this information will be help.

-- 
SMB folder sharing: very unclear error messages
https://bugs.launchpad.net/bugs/573608
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