Using smb_auth isn't enough. You'll need to join the domain, and use winbind to check NTLM username/passwords
Squid (in general and in RedHat packages) does *NOT* include NTLM support turned on. It's going to be recompile time

Mandrake may be a better move as 9.1 has NTLM already compiled into the squid.
I'd suggest looking through google.com for more info, as this is still cutting edge for squid. There are sometimes issues with 65535 NTLM queries, and other wierdness, but you'll definitely need 2.5STABLE2 or 2.5STABLE3 squid.
All said and done, it does work *very* nicely