That sort of thing happened to me
a lot when using the 2.0.0 client. Sometimes if you looked at the computer just the right way, it would work. My friend's computer worked fine sometimes, sometimes it didn't, mine almost always worked sometimes, unless I was at his house, etc... I'm very glad I don't use 2.0.0 but I still miss it sometimes.
If I were you, I'd continue trying to get the v4 clients to work. If you're using the v4 clients, make sure the client has encryption removed with UORICE and POL is running without encryption. I know in 097 port 5002 has encryption for clients 2.0.0 while port 5003 has none, you might want to check this too (in your uo\login.txt).