Can't Open NAS Sub-folders

I recently purchased a network drive and created two shared folders on it one
with a password one without.

I have one XP machine and one Vista on the network, the drive works
perfectly with XP, I can get straight onto the password protected folder no
problem. I could access the unprotected folder in Vista but not the
pass-worded one, I found out this was to do with the NTLM 2 protocol so I
changed this to 1 from 3 in the registry (due to me having a home edition).
I altered nothing else.

The instant I changed this I had problems with accessing the NAS. It lets me
get into either of the shared folders on the drive (even the password
protected one!) then when I try to open one of the sub-folders it starts to
load and carries on for about 10-15 minutes and never actually opens the
folder.

This is how far it will let me go before I cant access any further folders:

Network > Net-drive > Web

Anything beyond that and it just hangs while loading.

If any one can make any sense of this please let me know what to do, I am
absolutely tearing my hair out with this.

Thank you in advance for any help.

Rick