Did you add yourself to samba users?
You can try this GUI to configure it: system-config-samba 
I did this to configure mine:
Preferences > Server settings > Basic: input your Workgroup
Preferences > Server settings > Security: Authentication Mode=User, Guest Account=No Guest Account
Preferences > Samba Users > Add user:
Choose a Linux account (the one Samba will use when accessing the shared files. Usually, you want to choose yourself.)
Type in a user name and a password (does not have to be a real windows account or password, its just the input that Ubuntu will ask when someone tries to access the share. It can be "aaa" / "bbb")
So, basically, sharing folders involves two different authentications: first, the one that SAMBA, via SMB protocol, asks for from anyone that tries to access a share. That's step 2 above. Then, after Samba grants that person rights to access the share, Samba itself will need OS authorization to access to the filesystem and its files (the Linux owner-group-world security model). For that, Samba uses the user selected in step 1 above. So any folder (and files) you share must be accessible, inside Linux, by the user selected.
In the Windows world it works the same: there's the share authentication and the NTFS one.
Last but not least: whatever user you select (usually yourself), make sure that it has the Share Files with the Network privilege in Administration > Users and Groups > Advanced Settings button > Privileges tab. I think Ubuntu already grants this privilege to the first user it creates, but it doesn't hurt to check it out.
Also, to share folders, I don't use this GUI, I use Nautilus:
- Right-click the folder you want to share
- Select "Sharing Options"
- Give the share a name, and select read/write or anonymous access
Hope that works for you too!
First of all: if you want to share files, there are several different protocols of interest: Samba (SMB), NFS, FTP, SSH/sFTP/SCP. Samba is the easiest if a Windows computer is involved, but you can use it also between two Ubuntu (and even Mac OS) machines. SSH is a nice thing for Ubuntu, because it's a very powerful tool - e.g. running rsync over SSH is a command method to keep two directories synchronised. But I'd choose SMB because you mention Windows and probably setting up one protocol/server is enough for the beginning.
Only three important hints for further research about other protocols:
- Think about encryption - is it necessary that the protocol is encrypted or do you want to trust your LAN? (FTP is not encrypted, SSH/sFTP/SCP is)
- Do need to transfer huge files? (SCP is really slow compared to SMB in Gigabit networks! Google benchmarks if you are interested.)
- Is it necessary to keep the file permissions of the files transferred?
Now your questions:
1. When I share files between two Ubuntu machines via LAN, do I need Samba on both machines?
No, not the Samba server. There will be always a server and a client. You can access the shared folders on the server from the client - not the other way around. In other words: the copying progress bar will be always on the client, never on the server. But with two Ubuntu machines, both of them can be client and server at the same time, if you want. The client is shipped with Ubuntu per default, the server is installed automatically when you share a folder for the first time with Nautilus.
2. Without Defining permission on computer 1 I can see all files under / on computer 2. Is their any way to stop that visibility?
That's not true for SMB/Samba. There are certain shared folders and only these are visible to the clients. Check the folder /var/lib/samba/usershares/ and the file /etc/samba/smb.conf, if the path / is shared. Probably you are connecting with SSH and not with SMB. Then you are right, usually everything is visible and you have to set the file and directory permissions correctly. You can find more details about this here: Simple & easy way to jail users
3. Which user and password do I have to use while accessing other Ubuntu machine through Samba?
Usually it's simple: just use any user and password of the other machine. Only in very special cases the user's normal password differs from his Samba password. You can change the Samba password separately with the command smbpasswd, but you should really have good reasons to use two different passwords.
You can allow shares without password. There are many things to say about this, but probably this Nautilus screenshot helps for the beginning:
4. How to share files without GUI using the terminal?
The most common use case is SSH/SCP then probably. Just type the following in the client's terminal to copy /path/to/file1 on the client to /path/to/file2 on the server:
scp /path/to/file1 server:/path/to/file2
server can be an IP address or a domain name. Or another method already mentioned in other answers with rsync:
rsync /path/to/file1 server:/path/to/file2
With Samba you probably would use smbmount (which is not shipped with Samba per default) in order to mount a network share on the client. Then you can use it normally. There are many ways to mount a Samba share. If you are using Gnome, gvfs-mount might be the easiest method:
gvfs-mount smb://server/nameOfsharedFolder
cd ~/.gvfs/*
5. Why is the server not showing up in Nautilus / Network on the client?
As far as I know, the first time it doesn't show up there. After connecting to it once, you'll find it there. The first time, you will have to click "Windows Network", then "Workgroup" and then you'll see your server - hopefully. At least this was the result of my tests.
6. How to find the other system without knowing name or IP of the other system in LAN?
You can use nmap in the terminal, for example:
nmap 192.168.0.*
if 192.168.0.0 is your LAN. This will print you all network clients in your LAN (which can be discovered). Sometimes this might help, if other machines don't show up under Network.
Best Answer
Basically you can try viewing network in nautilus with
network:///in nautilus location bar. As for restarting samba server I think try replacing samba in your service command with smb or smbd. Or try using machine ip rather than machine name.