Logon to Win2003 domain

We have installed the Windows 2003 standard server with
Active Directory, and trying to configure the Win98 clients
to logon to the server, below are the config on the Win98
clients:
1) Installed IE6sp1
2) Installed DSClient 2003
3) Enabled NTLM 2 authentication (LMCompatibility=3)
4) Disable SMB Sign (EnableSecuritySignature=0,
RequireSecuritySignature=0) and disable on DC Security
policy

The Win98 clients were ABLE to logon to the Win2003 domain,
but with the option "Change password at first logon" is
turned on, the below error window appears after typing
the new passwords (2x), clicking OK.

"Unable to change the password for Microsoft Networking
because of the following error: Incorrect password"

Any advise is greatly appreciated.

thank you
Andy