"Funny" thing is that the same happens when I try to connect to the feisty machine FROM the same feisty machine. Feisty install is HERD 5 with all updates applied.

root@feisty:~# smbclient -d 3 //feisty/samba
lp_load: refreshing parameters
Initialising global parameters
params.c:pm_process() - Processing configuration file "/etc/samba/smb.conf"
Processing section "[global]"
added interface ip=192.168.1.22 bcast=192.168.1.255 nmask=255.255.255.0
Client started (version 3.0.24).
Connecting to 127.0.1.1 at port 445
Password:
Doing spnego session setup (blob length=58)
got OID=1 3 6 1 4 1 311 2 2 10
got principal=NONE
Got challenge flags:
Got NTLMSSP neg_flags=0x608a0215
NTLMSSP: Set final flags:
Got NTLMSSP neg_flags=0x60080215
NTLMSSP Sign/Seal - Initialising with flags:
Got NTLMSSP neg_flags=0x60080215
SPNEGO login failed: Logon failure
Anonymous login successful
Domain=[MSHOME] OS=[Unix] Server=[Samba 3.0.24]
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence()
convert_string_internal: Conversion error: Incomplete multibyte sequence()
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
resolve_lmhosts: Attempting lmhosts lookup for name ￜￜￜ<0x20>
resolve_wins: Attempting wins lookup for name ￜￜￜ<0x20>
resolve_wins: WINS server resolution selected and no WINS servers listed.
resolve_hosts: Attempting host lookup for name ￜￜￜ<0x20>
name_resolve_bcast: Attempting broadcast lookup for name ￜￜￜ<0x20>
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
convert_string_allocate: Conversion error: Incomplete multibyte sequence()
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence(ￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_internal: Conversion error: Illegal multibyte sequence(ￜ)
convert_string_internal: Conversion error: Incomplete multibyte sequence()
convert_string_internal: Conversion error: Incomplete multibyte sequence()
Connection to ￜￜￜ failed