New users - not able to create passwords

When new users are created, the initial password cannot be set:

[root@cd ~]# passwd newuser
Changing password for user newuser.
passwd: Authentication token manipulation error

The error in /var/log/messages:

PAM_smbpass[6570]: Failed to find entry for user newuser

This is a system I have inherited. Here is the system-auth:

auth required pam_env.so
auth requisite pam_unix.so likeauth nullok try_first_pass
auth optional pam_smbpass.so migrate
auth sufficient pam_unix.so likeauth nullok try_first_pass
auth required pam_deny.so

account required pam_unix.so
account sufficient pam_succeed_if.so uid 100 quiet
account required pam_permit.so

password requisite pam_cracklib.so retry=3
password requisite pam_unix.so nullok use_authtok md5 shadow
password sufficient pam_smbpass.so nullok use_authtok try_first_pass
password required pam_deny.so

session required pam_limits.so
session required pam_unix.so

This is the pam.d passwd file:

auth required pam_stack.so service=system-auth
account required pam_stack.so service=system-auth
password required pam_stack.so service=system-auth

It looks like when a new user is created, a user in smbpasswd is supposed to be created but it isn't. Can someone help me fix this problem?