Very strange I have no probs at all with 1.7. Using it through ssh on Lan and over internet gateway. All I can suggest are the problems I faced when setting up initially.
1)Make sure you have a server running on the windows machine. I use Cygwin which is free and easy to set up.
2) If you are running Vista home or Xp home it will need to be patched to get the term server running.
3)Make sure to open port 22 on your router and forward to appropriate ip.
4)Make sure to allow remote access to computer and open port 22 on firewall if needed.
5)Try sending it through ssh tunnel specific to local host
ssh -L3389:localhost:3389 user@remotemachine
Then when connection is established log into rdesktop and instead of putting ip address type
localhost:3389
6)Make sure your workgroup matches that of the workgroup computer you are logging into.
7)Double check that you are using the correct ip address if you are trying to connect outside of your LAN you will need your public ip address.
8) Finally make sure that port 3389 or whatever port you choose to use is listening on remote computer. For windows type:-
Netstat -a -n
into cmd prompt.

Sorry if these are basics to alot of you these are just issues that I have come accross and overcome to make it work. Hope it comes together.