Okey dokey, Windoze 9x/ME does not allow you to specify a username when connecting to remote hosts. Therefore, you must log into the Windoze machine with the same username as in your /etc/samba/smbpasswd, and make sure that username has access to the shared resource.
With Windoze NT/2000/XP, however, you can specify an arbitrary username when you connect to remote machines. The easiest way to do this is like this:
Code:
C:\Windows\> net use * \\sambaserver\sharename /user:whatever
Windoze 9x/ME does not support the /user switch, so you actually have to go to "Start>Shutdown", and select "Close all programs and log in as another user" and then type in the exact same username you have set up in samba.
I do not think that encrypted passwords is the problem. All Windoze versions use encrypted passwords by default, and samba does that too. If you wanna be safe, you can force encrypted passwords in samba.
Good luck!