smbpasswd fails to change password

Environment: 
Debian 6.0.5 ("squeeze") - armv5tel, on a DreamPlug
Problem: 

When a regular user was logged in, such as via ssh, using smbpasswd to update their Samba password would fail to change the password. The tool would run and prompt for passwords as usual, but the failure would be marked by a network-related error referencing 127.0.0.1 after re-entering the new password. An example error message was:

machine 127.0.0.1 rejected the negotiate protocol. Error was : NT_STATUS_INVALID_NETWORK_RESPONSE.

Status: 
Fixed
The Fix: 

This problem arose due to the use of the hosts allow setting in the /etc/samba/smb.conf file, in an attempt to ensure that only local machines could access shares on the DreamPlug. If the default was used (no "hosts allow" setting), the problem did not occur. To resolve this problem, I changed that setting from:

hosts allow = 192.168.

to:

hosts allow = 192.168. 127.0.0.1