Kalinda, did you look for a line "msdfs proxy = no" in your smb.conf, removed it and did a "sudo /etc/init.d/samba restart" and your problem remained? Then this might be a different issue.
Concerning downgrading, mrvanes said on 2007-03-24: "Downgrading samba, samba-common, smbclient and libsmbclient to Edgy's 3.0.22-1ubuntu4.1 resolves the problem." (see above). You might want to contact him directly if this did not work for you ;-)
Kalinda, did you look for a line "msdfs proxy = no" in your smb.conf, removed it and did a "sudo /etc/init.d/samba restart" and your problem remained? Then this might be a different issue.
Concerning downgrading, mrvanes said on 2007-03-24: "Downgrading samba, samba-common, smbclient and libsmbclient to Edgy's 3.0.22-1ubuntu4.1 resolves the problem." (see above). You might want to contact him directly if this did not work for you ;-)