Password Hashing in MySQL 4.1

I am having difficulty with a client application (Nucleus) authenticating against a database I set up. After researching the possible causes, I decided that it could be related to this tech article:

From what I’ve read, it appears that Nucleus on MySQL 4.1 (as well as other clients who are not using a 4.1.1 or newer client library) can work if the hosting provider has allowed for old passwords. I submitted a ticket but I’m curious to know if anyone else has encountered this?