1. Create a separate password file for Samba. To create one based on your existing /etc/passwd file, at a shell prompt, type the following command:
# cat /etc/passwd | mksmbpasswd.sh > /etc/samba/smbpasswd
If the system uses NIS, type the following command:
# ypcat passwd | mksmbpasswd.sh > /etc/samba/smbpasswd
The mksmbpasswd.sh script is installed in your /usr/bin directory with the samba package.
2. Change the permissions of the Samba password file so that only root has read and write permissions:
# chmod 600 /etc/samba/smbpasswd
3. The script does not copy user passwords to the new file, and a Samba user account is not active until a password is set for it. For higher security, it is recommended that the user's Samba password be different from the user's Red Hat Linux password. To set each Samba user's password, use the following command (replace username with each user's username):
# smbpasswd username
4. Encrypted passwords must be enabled in the Samba configuration file. In the file smb.conf, verify that the following lines are not commented out:
encrypt passwords = yes
smb passwd file = /etc/samba/smbpasswd
5. Make sure the smb service is started by typing the command service smb restart at a shell prompt.
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source:http://linuxpoison.blogspot.com/2008/04/135781758011229.html