I can only make a guess, a firewall issue on your XP clients, more blocked file types, DNS issues with finding your server.
Thanks for these pointers. I made sure:
1) Windows firewall is off
2) XP is on DHCP
3) User is logged into Samba domain via XP pc
4) WAN connection is up
5) User has credentials in /etc/proxyusers
6) Server reconfigured and rebooted
Of note: Client can access web-based mail (running on same box) with no auth other than usual log in to access mail.
EDIT: 11:30am
Also tried auth-pam. No auth dialog form appears at all on the XP pc. After a long time a "Cache Denied" message is given:
"Sorry, you are note allowed to access
http://blah.tld until you have authenticated yourself"
I'm going to systematically turn off all extension blocking in "bannedextenlist" and report back.