The issue is cleartext versus encrypted passwords. OS X Tiger gave you the option to send your passwords in cleartext. Leopard apparently has disabled this option. As in the next post, one option is to enable encrypted passwords on the server. The other is to use a utility like Cocktail to change this option. There is a new version for Leopard (
http://www.maintain.se/cocktail/index.php). Once it's downloaded and installed, open it and go to the Network tab, then the File Sharing tab. Select 'Allow sending password in clear text', then click Restart at the bottom of the window.