After Days and Days of troublshooting this. I found the issue.
For anyone else that has this type of issue.
Set the LAN Manager Authenticaiton level to Send LM and NTLM responses.
In the control panel
Administrative Tools -> Local Security Policy -> Local Policies -> Security Options --- in the right panel find "Network security: LAN Manager authentication level" double click it and in the pull down I selected "
Send LM & NTLM responses"
I hope this helps someone else with this issue. I think it happens in Windows 7 also....