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So, you can't access C$ on Windows 7 with smbclient? And this breaks your backup software? Yeah.

Step 1. Uninstall "Windows Live Essentials". Yes, it probably came in with an IE update or a service pack. It's worthless anyway. Remove. It somehow manages to break authentication, which tells me it is trying to do something very crap.

Step 2. regedit time.

  • HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Policies\System
    • DWORD: LocalAccountTokenFilterPolicy
    • Value: 1

On Windows 8, you may see failures with extended debug information like:

  • "SPNEGO login failed: Invalid parameter"

An updated samba (and thus smbclient) may fix this, otherwise you can try adding:

  • "client use spnego = no"

to smb.conf. This may impact other connectivity, so test it in the model first.