Well it turns out I left out an important detail: The folder contains vbs files, it worked when I tired to access a plain text doc or word doc. We also recently updated to ie7. I had to add "file://ts" to the trusted sites list in IE7. It works better now.
Thanks for your help. Hopefully, MS will remove IE dependence one day.
From your answer to another post that you are using a Workgroup, the most likely problems are that the user/pswd are different or don't exist on the server, or the user/pswd is not being passed in the correct syntax. In a Workgroup Users are local to each machine, JSmith on the server is not the same as JSmith on the workstation.
A Domain solves both of these issues and has many other advantages if you have more than 4-5 workstations. This is the best solution.
Option 2 is to setup a username and pswd on the server. This can be 1 server user for each wkstn user, 1 server user for each user security group desired: Accounting, Sales, Marketing, etc, or 1 server user for all users. The server username & pswd may, but are not required, to match the username and pswd on the wkstns. Don't use any blank passwords.
Create a batch file on each machine to map the shares as a drive letter and force authentication on the server. Place the batch file in a C:\Admin folder, place a shortcut to the batch file in the All Users Startup folder to have it run on logon, set it to run minimized. The syntax is:
"Net Use X: \Server\Share /User:Server\User Password".
"Net Use /help" will provide more examples.
Net Use X: /del will remove the drive mapping for testing, it will not delete any data.
You can also test authentication against the server with the Net Use command. If the authentication fails with "incorrect user name or password" then either the syntax, username, password or some combination of all 3 are wrong.
Option #2 is not secure and not recommended but could work as a temporary solution.
Best Answer
It's not a permission problem. You're trying to access the machine through the network stack. When you disconnect from the network, the UNC path (even though it's on the same computer) is not accessible. Why not use a local drive path instead of a UNC path?