Ah ok. Well I can duplicate your error anyhow. I'm at a loss about what the problem is though. The following LotusScript code also errors out on LoginWithPassword. I didn't install a Win32 LastError function so I couldn't examine that.
Sub Initialize
Set CS = CreateObject( "STComTk.CommunityService" )
Call CS.LoginWithPassword( "Server", "username", "password" )
Messagebox CS.IsLoggedIn
CS.Logout
End Sub