In your /etc/netmasks file you mention above, I assume the line:
128.32.0.0 255.255.255.0
is actually commented out (ie begins with a #). If it isn't add a # at the beginning. As far as I know this is just the standard example in the file, and isn't meant for use in a live environment. I'm reacing the end of my (limited) networking knowledge - anyone else out there with any ideas?