Can't access shares on Server 2008

I have a brand new file server with Server 2008 installed. I've turned file sharing on many servers before and have never had a problem. Now, I am having a problem accessing the shared drive in this new server. When users try to connect, they are prompted to enter their credentials. Nothing works even though the Everyone group has been granted Full Access to the shared drive. I've compared all the settings to working servers and everything is matched.

The only difference between this 2008 server and all of the other 2008 servers that I've had success with is that this new server is on a workgroup, not on a domain like the others. It is in the same workgroup as the clients trying to connect to them, so I don't think this should be a problem. Is this what is causing the problem? Why would this not work? Is it possible to share files using Server 2008 on a workgroup?

There is already an existing XP PC acting as a file server on this workgroup, but seeing as they are expanding, they need more than the limited 10 connections. So, why is the XP working, but the 2k8 server not?

Any ideas? Thanks.