Net Logon / Net Use against Windows 2003

Hi, I am trying to create a unattended Windows installation for my
environment and currently in the midst of creating a bootup disk. The bookup
process from floppy involves initializing the network adapter and followed
by connecting to a share drive on the network for all other installation
files. For connecting to the share drive, I am using Net Logon / Net Use.
Here are some of the setting / scripts I've used.

System.ini
************************************************** ***********
[network]
filesharing=no
printsharing=no
autologon=no
lanroot=A:\NET
workgroup=workgroup
reconnect=no
dospophotkey=N
lmlogon=1
logondomain=Mydomain
preferredredir=Basic
autostart=Basic
maxconnections=8
ComputerName=FILESERVER
************************************************** ***********
Environment Variables were set at the beginning of autoexec.bat
%DistUsr% = SHAREUSER
%DistPwd% = Password123
%sdrv% = G
%sshr% = \\FILESERVER\SHARE

Autoexec.bat
************************************************** ***********
NET LOGON /savepw:no %DistUsr% %DistPwd%
NET USE %sdrv% %sshr% %DistPwd%
************************************************** ***********

FILESERVER
************************************************** ***********
Windows 2003 Stadard Edition
Client for Micosoft Network / TCPIP installed.
Netbios over TCP/IP turned on
Acting as Domain Controller, DNS and WINS
SHARE directory has been configure to allow SHAREUSER full control rights
************************************************** ***********

When the Net Logon command was run, I received the following response...
"You were logged on, but have not been validated by a server. Therefore, you
may not have permission to use some network resources."

When the subsequent command of Net Use was run, I was prompted for Password
again. Upon entering, I was given a "Access has been Denied" response.

Any thoughts on this?

Thanks in advance.