Microsoft network client: Send unencrypted password to connect to third-party SMB servers
If this security setting is enabled, the Server Message Block (SMB) redirector is allowed to send plaintext passwords to non-Microsoft SMB servers that do not support password encryption during authentication.
Sending unencrypted passwords is a security risk.
Computer Configuration\Windows Settings\Local Policies\Security Options
At least Windows XP SP2, Windows Server 2003