I seem to be having this issue. Fresh install of 12.04
entbox@boc1:/etc/samba$ uname -a
Linux boc1 3.2.0-29-generic-pae #46-Ubuntu SMP Fri Jul 27 17:25:43 UTC 2012 
i686 i686 i386 GNU/Linux


entbox@boc1:/etc/samba$ testparm -s /etc/samba/smb.conf
Load smb config files from /etc/samba/smb.conf
rlimit_max: increasing rlimit_max (1024) to minimum Windows limit (16384)
WARNING: The "null passwords" option is deprecated
WARNING: The "password level" option is deprecated
Unknown parameter encountered: "update encrypted"
Ignoring unknown parameter "update encrypted"
WARNING: The "idmap uid" option is deprecated
WARNING: The "idmap gid" option is deprecated
Processing section "[homes]"
Processing section "[netlogon]"
Processing section "[profiles]"
Processing section "[printers]"
Processing section "[pdf-documents]"
Processing section "[pdf-printer]"
Processing section "[video]"
Loaded services file OK.
WARNING: You have some share names that are longer than 12 characters.
These may not be accessible to some older clients.
(Eg. Windows9x, WindowsMe, and smbclient prior to Samba 3.0.)
Server role: ROLE_STANDALONE
[global]
        workgroup = NEKKEDNETWORK
        netbios name = ENTBOX
        server string = 
        interfaces = 127.0.0.1/8, 192.168.0.0/24
        bind interfaces only = Yes
        client schannel = No
        server schannel = No
        allow trusted domains = No
        null passwords = Yes
        obey pam restrictions = Yes
        guest account = hg
        passwd program = /usr/bin/passwd '%u'
        passwd chat = *New*password* %n\n *ReType*new*password* %n\n 
*passwd*changed*\n
        passwd chat timeout = 120
        username map = /etc/samba/smbusers
        password level = 6
        username level = 6
        unix password sync = Yes
        log file = /var/log/samba/samba.log
        max log size = 1000
        name resolve order = wins lmhosts bcast
        client signing = No
        client use spnego = No
        socket options = TCP_NODELAY SO_RCVBUF=8192 SO_SNDBUF=8192
        printcap name = cups
        machine password timeout = 120
        add user script = /usr/sbin/useradd -d /dev/null -c 'Samba User 
Account' -s /dev/null '%u'
        delete user script = /usr/sbin/userdel '%u'
        add group script = /usr/sbin/groupadd '%g'
        delete group script = /usr/sbin/groupdel '%g'
        add user to group script = /usr/sbin/useradd -d /dev/null -c 'Samba 
User Account' -s /dev/null -g '%g' '%u'
        delete user from group script = /usr/sbin/userdel '%u' '%g'
        add machine script = /usr/sbin/useradd -d /dev/null -g sambamachines -c 
'Samba Machine Account' -s /dev/null -M '%u'
        logon script = %G.bat
        logon path = \\%L\profiles\%u
        logon drive = q:
        logon home = \\%L\homes\%u
        os level = 33
        local master = No
        domain master = No
        dns proxy = No
        remote announce = 192.168.1.255
        remote browse sync = 192.168.1.255
        usershare owner only = No
        template shell = /dev/null
        winbind separator = @
        winbind cache time = 360
        winbind use default domain = Yes
        winbind trusted domains only = Yes
        winbind nested groups = No
        winbind nss info = no
        idmap config * : range = 16777216-33554431
        idmap config * : backend = tdb
        hosts allow = 127., 192.168.0/24, 192.168.1/24
        cups options = raw
        follow symlinks = No

[homes]
        comment = Home Directories
        path = /home
        valid users = %U
        read only = No
        locking = No
        strict locking = No

[netlogon]
        comment = Network Logon Service
        path = /var/lib/samba/netlogon
        read only = No
        locking = No
        strict locking = No

[profiles]
        comment = User Profiles
        path = /var/lib/samba/profiles
        read only = No
        create mask = 0600
        directory mask = 0700
        locking = No
        strict locking = No

[printers]
        comment = All Printers
        path = /var/spool/samba
        printable = Yes
        print ok = Yes
        browseable = No
        locking = No
        strict locking = No

[pdf-documents]
        comment = Converted PDF Documents
        path = /var/lib/samba/pdf-documents
        admin users = %U
        read only = No
        guest ok = Yes
        locking = No
        strict locking = No

[pdf-printer]
        comment = PDF Printer Service
        path = /tmp
        guest ok = Yes
        printable = Yes
        print ok = Yes
        printing = bsd
        print command = /usr/bin/gadmin-samba-pdf %s %u
        lpq command = 
        use client driver = Yes

[video]
        comment = vid share
        path = /usr/share/xvideo
        valid users = entbox, hfic1
        admin users = hfic1
        write list = entbox, hfic1
        read only = No
        locking = No
        strict locking = No
entbox@boc1:/etc/samba$ 


Folder I'm trying to share : 

drwx------  1 entbox entbox 20480 Aug  6 15:17 storage.black

Error :

net usershare' returned error 255: Ignoring unknown parameter "update encrypted"
net usershare add: cannot convert name "Everyone" to a SID. Pipe broken.

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https://bugs.launchpad.net/bugs/513427

Title:
  'net usershare' returned error 255: net usershare add: cannot convert
  name "Everyone" to a SID. Invalid parameter.

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