Seeing same problem on each of 3 servers upgraded from Panther (10.3.9) to Tiger (10.4.7).
Problem does not exist when I log in to the Workgroup Manager (and LDAP) as an admin with password type “Open Directory”. Unfortunately, one of my servers does not have any OD admin accounts so I am unable to change or create any new OD accounts. Therefore, I can’t offer my PC users access to this particular server since Windows access requires users with OD password type. Infinite loop.
Apple had no solution and suggested, of course, to rebuild OD by demoting and promoting the server while exporting/importing the users and groups. Still looking for a solution that does not require resetting of all of my users’ passwords.