I get reliable connection with this setup and actions:

Setup

Power Book G4 with Panther (Mac OS 10.3.2)
AppleTalk ADSP Tool version 1.0.1 from Newton Press in the Classic system folders extensions. There may be other stuff in Classics extensions whose importance I am not aware of.
From Robert: And don't forget to turn on AppleTalk in Network (System Preferences): Show: Built-in Ethernet, the Appletalk pane

MP2100 OS 2.1
All ethernet packages (you could take a look at EthernetDrivers):

  1. Newton Internet Enabler 2.0 (main package)
  2. Internet Setup
  3. NIE Ethernet
  4. Appropriate ethernet card drivers (see http://www.chuma.org/newton/ethernet/ for details)

3Com 589D ethernet card with Dongle, inserted in the Newt with the ethernet cable already in, and all three drivers for that card.

Actions

On Newton:
In 'Prefs' in Unfiled Icons:
Appletalk: connect using: Ethertalk; Card: 3Com 3C589D PC Card (the 3Com Cards do not show up in 'Card'; if a card does appear there, can't hurt to set 'Use card for Appletalk' if it presents itself).

In Classic (freshly started, don't know how important, has helped when trouble, though):
open NCU, select Appletalk in preferences.

On Newt:
tap Dock, connect via: AppleTalk, Connect to: other computer - Newt is looking, finds the G4. Select it (if not automatically selected) close box, tap connect right away.

NCU lights up after some seconds. Set sync preferences. Do things.......