[gtr33m]

The ldap on machine one is the zimbra ldap, not another instance of ldap.
The idea is that zimbra and domain authentication will work with only machine 1 running. Machine 2 is a fileserver that will depend on machine 1 being present for authentication, but machine 1 is not dependant on machine 2 at all.

Now that I have throughly confused you, here's my smb from machine 1 (the pdc)

[global]
  workgroup = MEDALIST
  netbios name = mail
  os level = 34
  preferred master = yes
  enable privileges = yes
  server string = %h server (Samba, Ubuntu)
  wins support =yes 
  dns proxy = no
  name resolve order = wins bcast hosts
  log file = /var/log/samba/log.%m
  log level = 3
  max log size = 1000
  syslog only = no
  syslog = 0
  panic action = /usr/share/samba/panic-action %d
  security = user
  encrypt passwords = true
  ldap passwd sync = yes
  passdb backend = ldapsam:ldap://mail.medalist.com.au/
  ldap admin dn = "cn=config"
  ldap suffix = dc=medalist,dc=com,dc=au
  ldap group suffix = ou=groups
  ldap user suffix = ou=people
  ldap machine suffix = ou=machines
  obey pam restrictions = no
  passwd program = /usr/bin/passwd %u
  passwd chat = *Enter\snew\sUNIX\spassword:* %n\n *Retype\snew\sUNIX\spassword:* %n\n *password\supdated\ssuccessfully* .
  domain logons = yes
  logon path = \\mail.medalist.com.au\%U\profile
  logon home = \\mail.medalist.com.au\%U
  logon drive = K:
  logon script = logon.cmd
  add user script = /usr/sbin/adduser --quiet --disabled-password --gecos "" %u
  add machine script = /usr/sbin/adduser --shell /bin/false --disabled-password --quiet --gecos "machine account" --force-badname %u
  socket options = TCP_NODELAY
  domain master = yes
  local master = yes

and using it as a base, the modified smb.conf for machine 2:

[global]
  workgroup = MEDALIST
  netbios name = server1
  os level = 33
  preferred master = yes
  enable privileges = yes
  server string = %h server (Samba, Ubuntu)
  wins support =no 
  dns proxy = no
  name resolve order = wins bcast hosts
  log file = /var/log/samba/log.%m
  log level = 3
  max log size = 1000
  syslog only = no
  syslog = 0
  panic action = /usr/share/samba/panic-action %d
  security = user
  encrypt passwords = true
  ldap passwd sync = yes
  passdb backend = ldapsam:ldap://mail.medalist.com.au/
  ldap admin dn = "cn=config"
  ldap suffix = dc=medalist,dc=com,dc=au
  ldap group suffix = ou=groups
  ldap user suffix = ou=people
  ldap machine suffix = ou=machines
  obey pam restrictions = no
  domain logons = yes
  logon path = \\mail.medalist.com.au\%U\profile
  logon home = \\mail.medalist.com.au\%U
  logon drive = K:
  logon script = logon.cmd
  socket options = TCP_NODELAY
  domain master = no
  local master = yes

What I changed was to remove the passwd lines, the add user and machine lines, change the domain master to no and wins support to no.

I'm not sure if it should be the local master or wether is should be the preferred master.

Something is still wrong because I can't even connect to machine 2 from windows even if I use the ip address