-35 errors when trying to log on to server update

After looking into this further I found out what was really happening.

If you go to the connect to server dialog box you will see a little cog in the lower left hand corner.

Picture 2

Click on options and you will see the following screen.

Picture 3

If you now untick, allow sending password in clear text, and try and logon to a Window Server you will get the -35 error. Deleting the preferences as I suggested before only resets the tick box back on. I am sure their is a setting on the server to allow non clear text passwords. When I find it, I will post it here.
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