I want to note that the recent update (Hotfix 1.42) fixed the issue for me once I set it back to the original password longer than 5 characters.

Just an FYI. I can confirm that I am also running Win2008 server and having this issue.

I had the exact issue and setting the admin password to 5 letters or less worked fine. Despite this I see this as a workaround not a solution as 5 letters is laughably insecure as a password.