Someone said that Vista defaulted to higher security requirements and that turning that off would resolve the connection problems they were having. In that case it did "fix" the problem. I suspect that may be the issue here however I have not been able to find anything on the topic again.
I found the answer (just love Goggle)... "It turns out that NTLMv2, the authentication protocol, is required by default on Windows Vista. According to the Samba Features by Release wiki page, support for NTLMv2 in Samba wasn’t fully developed until Samba v3.0.21."
So it appears that either an older version of Samba is being used or NTLMv2 support is not turned on. Ralph/Tony? As Vista requires v2 by default and does not fallback to v1 if required you have to change the default. You can use secpol.msc to change it or update the registry manually using the lines below. My tests with Windows7 RC1 32/64bit indicate that MS changed the default again as they both worked without mods.
Windows Registry Editor Version 5.00