No longer able to access mapped network drive as now requesting network username and password.

I have two independent PCs that connect via LAN to a standard ADSL 2+ router.
Both the operating systems are Windows 7 professional. One PC (PC1) stores all the main data files. The second PC (PC2) accesses these files via mapped network drives. We do not use a server or have a domain. Since restarting PC2 we are unable to access our network drives without a request for a username and password. The message appears as follows:
Windows Security
Enter network password
Enter your password to connect to:
Falcon Hotel (this is PC1)
Username:
Password:
We have tried the logon username and password for all users and the homegroup password. All have failed. We have reset passwords and tried but still without success.
Both machines are on the same workgroup and homegroup.
I’ve looked at the settings within “network and sharing center, advanced sharing settings” and ensured file sharing is allowed and passwords are not requested.
Permissions on the share files have been set to “allow” for “everyone” and “read/write”. No passwords set.
I have created a new share folder on PC1 and tried mapping this on PC2. This has the exact same problem. However if I create the share folder on PC2 and try mapping from PC1 this works fine without any requests for a username and password.
I have tested with firewalls disabled.
I have also tried the following suggesting found through a google search:
1) Open control panel
2) Open the local security policy
3) Select security option under local policies
4) Choose send LM & NTLM responses in network security: LAN manager authentication level.
I tried the above on both machines.

Any ideas?

Thanks in advance.