The specified password is not correct

I don't know which recent Windows Update did this but both my Windows Server 2008 AND my Windows 7 64-bit computers suddenly stopped being able to connect to any shares on my Windows Server 2003. Attempts to connect were met with "The specified password is not correct".

After much searching and trying different options I discovered that the Windows security policy "Network security: LAN Manager authentication level" was not set. Changing this to "Send LM & NTLM - use NTLMv2 session security if negotiated" fixed the problem. Start-Run secpol.msc is the tool you need to run to change it and this is what it looks like:

Yet another case where Microsoft error messages are just plain wrong. Someone clearly decided to throw the same message whether the password is incorrect or whether one of many other problems occurred during the negotiation between two computers.