samba - Mar 2002 - Windows XP Home with Samba 2.2.3a can't map a network drive

OK, so I looked through all the archives and still can't find a solution.
My server is running RedHat 7.2 with all the latest patches, Samba is also
latest 2.2.3a with domain masters set as "yes" and passwords NOT set
as encrypt, because when I do turn it on, none of the Win98 boxes can log on
(even when I tried to create non-blank password account). All Win98 boxes login
flawlesly, since all of them use blank passwords/no passwords (for now), but now
I got 1 XP Home edition box and I am really not willing to go and change things
on lots of boxes just for this computer.
Here is what I tried:
I did apply the "signandseal" patch for XP that comes with Samba. I
tried to log-in. Nothing...
I tried to turn on the encrypted passwrods on samba and import the user/password
data with smbpasswd program. No luck, even if I enter the right username and
password, it keeps on poping back-up asking for username/password info.

Any ideas?

Thanx