I know this thread is a bit old now, but in case anyone else has the issue I had a user who had been connecting quite happily but then could not get in today. It turns out the protocol allowed (Properties > Security tab at the bottom) was changed from "Unencrypted password (PAP)" to "Microsoft CHAP Version 2 (MS_CHAP v2)". Unchecking the latter and checking the former once more fixed the issue. As to how it got changed is still a mystery.
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