Meanie, Thanks for the update.
I got it working! kinda... Not sure what did it. I added the record in the hosts file,uninstalled and reinstalled the smbmounter ipk, also made sure that it runs with root privileges and rm -rf all the directories in /hdd3/Documents/NetworkFolders/ (that is pretty key, it won't work at all if the directory is there). I found that you MUST hit the unmount button even if it doesn't work to clear the created directory.
It still doesn't work if I launch it from the Q application menu. It does work if in terminal, running as zaurus user I type: sudo smbmounter.
Any ideas?