FreeRADIUS: Reading winbind reply failed!

Platform:

Ubuntu Server 14.04.1 LTS
Samba 4.1.6
FreeRADIUS 2.1.12

Issue:

You’re testing the ntml_auth/ms-chap authentication of a newly set up Ubuntu/FreeRADIUS server, but you’re getting this error:
Exec-Program output: Reading winbind reply failed! (0xc0000001)

Cause:

It’s a permissions issue! ntml_auth doesn’t have the right access to read the winbindd pipe. Since ntlm_auth is ran via FreeRADIUS, it shares its permissions and access.

Fix:

Stop the service:
# service freeradius stop

Add FreeRADIUS user to winbindd group:
# usermod -a -G winbindd_priv freerad

Correct the permission on the Winbind pipe:
# chown root:winbindd_priv /var/lib/samba/winbindd_privileged/

Re-start the service:
# service freeradius start

Now you can test the MS-CHAP authentication again:
# radtest -t mschap username password localhost 0 testing123