I tried the terminal command and it logged in to my XP laptop no probs, doing an LS listed the correct contents of the shared folder also.
As this worked I went back to Finder->Network->Workgroup->RED (my laptop) and pressed connect... Beachball occours.
So I can login via termain but not via finder. After having a look in the console log it reports -
mount_smbfs: negotiate phase failed: syserr = Operation timed out
Under system.log it reports a few errors (308,313,354,371) all basically saying
/usr/sbin/smbd getnameinfo(): Non-recoverable failure in name resolution.
The terminal window itself reports
init_iconv: Conversion from UTF-16LE to CP0 not supported
It then tries about 14 different conversions until its happy on ASCII to ASCII at which point it logs in and sits at smb: \>
So although it would seem its windows that causes it (see previous post) OSX can still log in, just not in the much easier Finder interface.