Answer by Evan Anderson for Configuring samba with encrypted passwords and share-level security to work with Win95

There's an outside chance that your Windows 95 machines aren't supporting "encrypted passwords". You could try adding the following to the "global" section of your smb.conf file:

encrypt passwords = no

Assuming this works, the "right thing" to do would be to apply the necessary updates to get Windows 95 to use encrypted passwords (I believe that "SP1" did it, but I can't swear to that-- it has been, like, 10 years since I've used much Windows 95).