I finally managed to fix the problem, but not in the way that I expected. Here's my story.

Unfortunately from what I've read, the error 'path is too deep' is just a general windows error when it can't connect to some external resource. It's been reported when accessing network shares & usb drives, etc, since around 2004 with 'doze 2000. Everyone reports a different fix that worked for them, from software fixes like yours to hardware (bad cables and/or nics).

I've tried several dozen software tweaks to no avail (amongst them tweaking the card speed from as low as 10mb-hd up to 100mb-fd on both the server & client boxes, a couple different registry hacks including yours). It wasn't until after I tried replacing the cable between the server & the hub it's on when I thought that since the server was the only box connected to the 4-port hub that I had just attached to the last free port of my router, then maybe that was the cause. I connected the server directly to the router then lo & behold, I've just copied over some files from my wife's pc not only without any errors, but a lot faster then it was before.

Just goes to show that you have to trouble shoot from the ground up. First make sure the power to the house is on, then make sure the pc is plugged in, etc

Thanks for the help.