The 'disable SMB for NT' is what Snap techs' was saying to temporary fix the kb885250 issue, so this does sound a similar problem. MS also issued an update to kb885250 (with a different kb #, just to catch us out) that caused similar issues.
At work I blacked both these patches out until I could flash the Snap boxes up to version 4.x.
But having said that, it was only XP sp1 machines that got the error - sp2 machines worked OK with kb885250 applied though?
Nick
This was the other hotfix that caused (me) problems -->
http://www.microsoft.com/technet/sec.../MS06-030.mspx