Created attachment 7784 [details]
Copies of the two files.
This is the second time I have run into this issue.
On a second file server with a clean Ubuntu Server installation.
I edited the default /etc/samba/smb.conf,
ran testparm and all was good
ran smbclient -L localhost and got the following error
Server requested LM password but 'client plaintext auth = no' or 'client ntlmv2 auth = yes'
session setup failed: SUCCESS - 0
The fix was copying the smb.conf from the existing server to the new server and then editing it with the new server info. Rebooted and it worked.
It seems like "encrypt passwords = no" is causing your problems. This parameter is set to "yes" by default. Your "original" smb.conf file is not from the Samba sources, so I think you should ask the package maintainers.
Closing out bug report.