Xerox Workcenter M123 SP2 problem

My office just purchases a Xerox Workcentre M123 and we can't get it to work as a printer when we have service pack 2 installed. Computers that don't have SP2 can print to the M123 fine, but if the computer has SP2 installed you can't print. We tried making the printer NOT the default printer so we could select it in the print dialoge box. Basically what happens is when you select the M123 as the printer to use the drop down box gets stuck and everything freezes for a while and then this pops up:

"The printer has not yet responded, but the Microsoft Office program may be able to proceed without the printer information. Do you want to continue to wait for the printer?"

If you click "Yes", then this message disappears and the Print dialogue box will then display the printer name and it's information correctly and everything is running fine. The harddrive light isn't on, everything is quiet. It acts like everything is ready for you to print to the M123 even though you had just gotten the message above. So you click "OK" and another message appears:

"Windows cannot print due to a problem with the current printer setup. Try one or more of the following:

* Check the printer by printing a test page from Windows.
* Make sure the printer is turned on and online.
* Reinstall the printer driver."

Well, we have the lastest version of the driver. We made sure of that by going to the Xerox website. The funny thing is, if you go to another computer on our network that doesn't have SP2, everything works great. You can print from any program, even AutoCad. And the document is out there waiting for you when you get to the printer. It's pretty fast, but if you got SP2 you're SOL. It's either all or nothing

SP1 - all
SP2 - nothing