I am also having this issue, but passwd doesn't give me the password
successfully changed message, but give me...

# passwd allen
passwd: Authentication token manipulation error
passwd: password unchanged

If I comment out the entries containing /lib/security/pam_lsass.so from
common_auth, common_password, and common_account, I can change passwords
and su to local users, but I can no longer authenticate my domain
account, which was expected.

This problem started occurring after running update.  When I first
installed likewise 5.1 on ubuntu 8.10, I did not have any problems using
domain or local accounts.

-- 
likewise-open prevents local passwords from being changed
https://bugs.launchpad.net/bugs/302026
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