1) actually I had a user on the FC3 box with the same user name and password as my XP "administrator" user. Until yesterday it gave me the same "Folder could not be displayed. You do not have permissions ..." error.
2) Today , I double click the "Computer" icon, I get a window with "Windows Network" icon, when I double click this, I get an empty window (0 items)
3) However when I type smb://Xpmachine name/Share I'm prompted for user name, domain and password, and lets me in when I enter these.
4) 2) and 3) work the same no matter which FC3 username I use.
Looks like samba is fine but something's screwed up with nautilus.
Also I don't know what caused the change between yesterday and today. I did uncomment the "encrypt = yes" line today, but I think 2) and 3) happened even before I made this change.