DNS issue when connecting Window 7 client to sbs2003

Is this the first Windows 7 machine on the network?

Is NETLOGON service running on the DC?

Is the SBS 2003 box handling DHCP on the network?

What DNS servers is the Windows 7 box being assigned? Is the IP of the DNS server SBS 2003?

We have 10 windows 7 machines on the network

Netlogon Service is running and have restarted to make sure all ok.

SBS 2003 Box is DHCP

DNS Windows 7 box was auto assigned to SBS2003 box - and I have also added it manually to make sure it has the sbs2003 box as DNS

What happens if you run DCDIAG on the SBS2003? Any errors?

C:\Program Files\Support Tools>dcdiag

Domain Controller Diagnosis

Performing initial setup:
   Done gathering initial info.

Doing initial required tests

   Testing server: Default-First-Site-Name\SERVER1
      Starting test: Connectivity
         ......................... SERVER1 passed test Connectivity

Doing primary tests

   Testing server: Default-First-Site-Name\SERVER1
      Starting test: Replications
         ......................... SERVER1 passed test Replications
      Starting test: NCSecDesc
         ......................... SERVER1 passed test NCSecDesc
      Starting test: NetLogons
         ......................... SERVER1 passed test NetLogons
      Starting test: Advertising
         ......................... SERVER1 passed test Advertising
      Starting test: KnowsOfRoleHolders
         ......................... SERVER1 passed test KnowsOfRoleHolders
      Starting test: RidManager
         ......................... SERVER1 passed test RidManager
      Starting test: MachineAccount
         ......................... SERVER1 passed test MachineAccount
      Starting test: Services
            IsmServ Service is stopped on [SERVER1]
         ......................... SERVER1 failed test Services
      Starting test: ObjectsReplicated
         ......................... SERVER1 passed test ObjectsReplicated
      Starting test: frssysvol
         ......................... SERVER1 passed test frssysvol
      Starting test: frsevent
         ......................... SERVER1 passed test frsevent
      Starting test: kccevent
         ......................... SERVER1 passed test kccevent
      Starting test: systemlog
         An Error Event occured.  EventID: 0x00000457
            Time Generated: 01/14/2014   16:29:17
            (Event String could not be retrieved)
         An Error Event occured.  EventID: 0x00000457
            Time Generated: 01/14/2014   16:29:20
            (Event String could not be retrieved)
         An Error Event occured.  EventID: 0xC0000021
            Time Generated: 01/14/2014   16:29:30
            (Event String could not be retrieved)
         An Error Event occured.  EventID: 0x0000165B
            Time Generated: 01/14/2014   16:38:28
            Event String: The session setup from computer 'SALES209' failed
         An Error Event occured.  EventID: 0x000016AD
            Time Generated: 01/14/2014   16:42:18
            Event String: The session setup from the computer SALES209
         ......................... SERVER1 failed test systemlog
      Starting test: VerifyReferences
         ......................... SERVER1 passed test VerifyReferences

   Running partition tests on : ForestDnsZones
      Starting test: CrossRefValidation
         ......................... ForestDnsZones passed test CrossRefValidation

      Starting test: CheckSDRefDom
         ......................... ForestDnsZones passed test CheckSDRefDom

   Running partition tests on : DomainDnsZones
      Starting test: CrossRefValidation
         ......................... DomainDnsZones passed test CrossRefValidation

      Starting test: CheckSDRefDom
         ......................... DomainDnsZones passed test CheckSDRefDom

   Running partition tests on : Schema
      Starting test: CrossRefValidation
         ......................... Schema passed test CrossRefValidation
      Starting test: CheckSDRefDom
         ......................... Schema passed test CheckSDRefDom

   Running partition tests on : Configuration
      Starting test: CrossRefValidation
         ......................... Configuration passed test CrossRefValidation
      Starting test: CheckSDRefDom
         ......................... Configuration passed test CheckSDRefDom

   Running partition tests on : lakeshores
      Starting test: CrossRefValidation
         ......................... lakeshores passed test CrossRefValidation
      Starting test: CheckSDRefDom
         ......................... lakeshores passed test CheckSDRefDom

   Running enterprise tests on : lakeshores.local
      Starting test: Intersite
         ......................... lakeshores.local passed test Intersite
      Starting test: FsmoCheck
         ......................... lakeshores.local passed test FsmoCheck

C:\Program Files\Support Tools>

When trying to join the Win7 machine to the domain and you using just LAKESHORES, or, have you also tried the fully qualified domain name? Such as LAKESHORES.LOCAL or whatever your FQDN is.

I have also tried LAKESHORES.LOCAL  and then get an error which say "the directory could not be found"

I have also just checked the event viewer to find the events listed above:

"The session setup from the computer %1 failed because there is no trust account in the security database for this computer. The name of the account referenced in the security database is %2."

Yea, that error is easily fixed by removing and adding the computer back onto the domain.

Thats what I have tried to do but I am unable to rejoin

Make sure the computer account is deleted from Active Directory.

If that doesn't work or it is gone try changing the computer name.

Have deleted but still get the first error I posted

also tried different computer names

Only see _msdcs.LAKESHORES.LOCAL in dns just ran ipconfig /registerdns

Did the REGISTERDNS command fix it?