You don't necessarily have to disable password complexity to use Radius, especially if you use Microsoft's own IAS or the new NPS in 2008.
Good article on 802.1x
http://www.ciscopress.com/articles/article.asp?p=29600This TechNet article alludes to the issue of having to relax complexity that is no longer an issue with Windows 2008 NPS
http://social.technet.microsoft.com/Forums/en-US/winserverNAP/thread/e801bdac-9347-4efb-9d7c-bcf4d64aa927/OpenVMPS may be a viable solution for you, as I would never put an obsolete piece of hardware into a production environment.
