So do I take it "all the latest updates" means the Vista is at SP2?
Does the Icon for the networked printer look the same on both systems?
I'll tell you what happened with my Epson printer. It only has a Vista driver available. If I plug it into the Vista PC, all is great. If I try to attach it to the Windows 7 machine, the Vista PC will see it over the network, but the icon is not the same. It cannot detect ink levels. It sees it as some generic printer. It doesn't work.
The printer has to be able to serve the driver over the network. The machine that only has network access should be able to do all the stuff like check ink or toner levels, print test page, clean heads or whatever, that the local machine can do. If it can't, it's not getting the driver over the network.
If it can do everything but print over the network, then I'd look on the Vista PC for the problem. If you have any firewall, set all access to everything and disable the firewall service until you get it to work.