What you need to do is configure the sme-server (I assume you are running 5.1.2) as a Domain controller from the e-smith manager page. You then need to add the win2000 machine into that domain - do this from the network properties on the workstation and type the domain name in as per the workgroup name you have set on the server. When asked for a username and password to add to the domain, use the admin account details you setup on the server.
After a reboot you are then properly logging into the domain (with the user details setup on the server). You can then change the password in the fashion you tried to above.
Hope this helps.