But by late in the day, officials had produced no hostages and there were growing indications the incident had been grossly exaggerated and was perhaps an outgrowth of a tribal dispute or political maneuvering.
The town of about 1,000 families, evenly divided between Shiites and Sunnis, lies about 13 miles south of the capital in what the U.S. military has called the "Triangle of Death" for the danger awaiting U.S. soldiers in an area that has become a roiling stronghold of the insurgency.
An AP photographer and TV cameraman who were in or near the town said large numbers of Iraqi forces had sealed it off, supported by U.S. forces farther outside Madain.
But inside the cordon, the town was calm. The cameraman, who toured the town Sunday morning, said people were going about their business normally, shops were open and tea houses were full. Residents contacted by telephone also said everything was normal in Madain.
American military officials said they were unaware of any U.S. role in what had been described as a tense sectarian standoff.
On Monday morning, an AP photographer joined Iraqi security forces who searched orchards on the outskirts of the agricultural town and streets in central Madain in vehicles and on foot. No hostages were found, and the forces encountered no resistance, the photographer said.
Lt. Mohammed Abdelamir, an Iraqi commando in the operation, said in a telephone interview that the sweep was larger than several raids that had taken place recently on a few homes, but he refused to say how many soldiers searched Madain on Monday.
Elsewhere in Iraq, at least 33 people died over the weekend in insurgent violence, including four U.S. soldiers and a 28-year-old American aid worker identified as Marla Ruzicka, of Lakeport, Calif., the founder of a group that was trying to determine the number of civilian casualties in the country.
On Monday, two Iraqi policemen were killed and six injured when a roadside bomb exploded as their two patrol cars drove through Basra in southern Iraq, said police Capt. Alaa Hasan. In northern Iraq, an explosion damaged an oil pipeline near Beiji, the country's largest refinery, starting a huge fire and leaking oil toward the nearby Tigris River.
The confusion over Madain illustrated how quickly rumors spread in a country of deep ethnic and sectarian divides, where the threat of violence is all too real. Poor telephone communications and the difficulty of traveling from one town to the next because of daily attacks on the roads make it difficult even for government officials to establish the facts.
Military officials and police who had earlier given alarming information about the troubles in Madain could not be reached for further details later in the day Monday.
National Security Minister Qassim Dawoud had warned parliament on Sunday of attempts to draw the country into sectarian war and said three battalions of Iraqi soldiers, police and U.S. forces were sent to Madain. He said the Iraqi military was planning a large-scale assault on the region by week's end.
Sunni groups, however, had denied the kidnapping reports.
On Sunday, Sheikh Abdul Salam al-Kubaisi, a spokesman for the Association of Muslim Scholars, an organization of Sunni clerics, denied hostages had been taken. "This news is completely untrue," he told al-Jazeera television.
And the country's most-feared insurgent group, al-Qaida in Iraq, also denied there had been any hostage-taking in a statement Sunday on an Islamic Web site known for its militant content. The group, headed by the Jordanian-born terrorist Abu Musab al-Zarqawi, said the incident was a fabrication by the "enemies of God" to justify a military attack on Madain aimed at Sunnis.
Whatever happened in Madain began Thursday when Shiite leaders claimed Sunni militants had seriously damaged a town mosque in a bomb attack. The next day, the Shiites said, masked militants drove through town, capturing Shiite residents and threatened to kill them unless all Shiites left. Shiite leaders and government officials had earlier estimated 35 to 100 people were taken hostage, but residents disputed the claim, with some saying they had seen no evidence any hostages were taken.
Security forces began raiding sites Saturday in search of those abducted, Dawoud said