ntlmv2 in win98

im having a problem with a 98se machine logging onto a server2k3 machine
using ntlmv2.
I enabled NTLMv2 authentication on my standalone server2003 machine,
however, I have one 98se client, which doesnt support ntlmv2 natively. so, i
installed the dsclient.exe and created the dword value: "LMCompatibility" in
the hklm\system\currentcontrolset\control\lsa key and set the value to 3.
however, machine being prompted for password when connecting to server. so,
i reset the server security setting to ntlm and lm, however, still cannot
logon from 98 machine. i am being prompted for a password and it is not
being accepted - "access denied".
i would appreciate any help anyone can offer.