I'm using two 3005 VPN concentrator with software version 4.7.2L, two 6513 with sup720 and IOS 12.2(18)SXF7.
Area 43 has simple password authentication and it works fine.
Now, when I try the message-digest authentication the show ip ospf neighbor command shows the INIT state between IOS and VPN: IOS works fine with IOS!
I'm not able to reproduce this issue with my lab enviroment.
You should be able to establish the session by disabling the "local link support" on the IOS side using the following command:
router ospf xx
no capability lls
Hope this helps,