Clients must use a wired connection, on the same lan as SME Server for the new password to take effect (or the must have the correct WINS settings if they are on a different subnet). It won't work if you're using WiFi or OpenVPN (because the connection is not available when the login occures, so the old, cached password is used). You just need to login once using a wired connection to update the cached password, then it'll be used offline.