Allowing Network Access with Blank Passwords (XP and Vista)

Although you can log in locally without a password, by default, WindowsXP Pro does not allow network users to access the computer without a password. Typically you will receive an Unknown error 31 if this is the case.

To change this setting:

Run gpedit.msc

Go to Computer Configuration / Windows Settings / Security Settings / Local Policies / Security Options
Double click on Accounts: Limit local account use of blank passwords to console login only.
Disable this option