Windows XP SP2 doesn't remember network share passwords

[Brandon]

Your local security policy database is definitely corrupted then. What I'd recommend is that you back it up, then repair it. You can repair it using the esentutl /p command from the cmd prompt.

So, open up a cmd prompt and type esentutl /p %windir%\security\database\secedit.sdb

That utility should repair your database and set you up properly. Then you can proceed with what you are attempting to try.