Pagination on category pages not working

I have set up a site with pages assigned to individual categories. The code I have in my category.php template displays all of the posts (using a custom post type) in the selected category, but when I insert the code needed to get the pagination to work, it displays all posts, regardless of category. I’m somewhat of a WordPress (and PHP) novice, and am likely missing something about how the code works.

Here’s what I have currently:

<?php $term = get_term_by( 'slug', get_query_var( 'term' ), get_query_var( 'category' ) ); ?>
<?php $paged = (get_query_var('paged')) ? get_query_var('paged') : 1;
query_posts( array('post_type' => 'lesson', 'category_name' => $term->slug, 'paged' => $paged));?>

<?php if ( have_posts() ) :  while ( have_posts() ) : the_post(); ?>
// loop here
<?php endwhile; ?>
<?php toolbox_content_nav( 'nav-below' ); ?>
<?php endif; ?>
<?php wp_reset_query(); ?>

I’m using the Toolbox theme, which has built-in content navigation menus. I’ve also tried using wp_pagenavi code to no avail, so I think it’s a problem with how I’m using query_posts.

Any help would be appreciated. Thanks!