Is the (first) server registered in Local Intranet Zone in Internet Explorer?
Another tip is to delete saved credentials. I don't have a XP/Vista machine in front of me, but in Windows 7 it's called "Manage windows credentials" in Control Panel. Look for "Password" or "User" or something similar in this users Control Panel.
Good luck!
Just taking a guess here but his machine account password might have gotten messed up. You could try resetting the machine password. However, unjoining, cleaning up the machine account in AD and then rejoining back to the domain has given me better results in the past.
User account.
Interestingly, I just helped a customer with a similar issue.
It was related to the client machine using cached credentials when authenticating to the server.
A reboot of the machine showed that the user account password was locked out.
I also found an interesting tool that allows you to remove cached user credentials.
Run this command to launch it.
rundll32.exe keymgr.dll, KRShowKeyMgr