I ran into this Windows "gotcha" while installing a Net Integrator for a client to replace a NAS device that they had outgrown.
The client has six departments and wants to set up a team, or group, directory for each department. Each team must be uniquely password protected so that only the respective team members can access that team's data. Some employees must be able to access data belonging to more than one team. Normally, this wouldn't be a problem. We'd create an account for each user and assign the users to one or more teams as required.In this case, we don't have client access licenses for each user so we need to make use of password protected teams and use the Windows NT/2000/XP ability to connect as a different user.
The user logs onto his machine using username and password and then attempts to map to a network drive i.e. \\server\teamA. Because his username/password combination is not valid for that share, the user will be prompted to login as another user. He can then supply the team name and password i.e. teamA/passwordA and the connection will be made.
The fun begins when the user requires access to teamB as well. If he goes to the drive mapping dialog and selects "Connect using a different user name", he will be prompted for the name and password i.e. teamB/passwordB. The mapping will fail with the error "The credentials supplied conflict with an existing set of credentials." Windows is telling him "I'm already using a valid name and password for this machine - don't try to confuse me." The key phrase is "for this machine". Once Windows has a connection to a given machine, it will insist on using the credentials that were successful the first time. We need to convince Windows that it hasn't got a connection to this machine...
If we add the following enteries to the HOSTS file
serverA 192.168.0.100
serverB 192.168.0.100
serverC 192.168.0.100
and map the drives using \\serverA\teamA, \\serverB\teamB and \\serverC\teamC, Windows will think that is trying to connect to shares on three different machines and will work correctly.
If you have a local DNS (domain name server) you could add records there instead of the HOSTS file and thus avoid having tp provide a modified HOSTS file for every machine on your network.
Remember, computing doesn't have to be this hard but you're using Windows.

