Unfortunately, I'm having the same issue. This is my first time installing and running the application. I have attempted what you suggested, both the reset updates, and both win2k and 98 compatibility on the client.exe. Same issue every time. If I enter my password incorrectly, it knows and tells me to try again. If I enter it correctly, drop to desktop. Any other ideas? I'm also running Win Vista Home Premium (64-bit in my case)
Edited:
Ok. Well, I tried everything again. Rebooted. Still no luck, then lo and behold, changed the compatibility mode on client.exe again this time back to win2k and now I'm in. Yay for Windows