Just to add my 2p:

I have exactly the same problem.
W2K works fine, XP does not. Running v4.20,
will try 4.21 tomorrow.
Printer name and printer share name is exactly the same.
I use the following code:

if InGroup("PRINTER501")
AddPrinterConnection("\\SERVERNAME\PRINTER501")
endif

if InGroup("SOMEDEPT")
SetDefaultPrinter("\\SERVERNAME\PRINTER501")
endif