I had the same problem… Try this 
class MK
{
Stream connection;
TcpClient con;
public MK(string ip)
{
con = new TcpClient();
con.Connect(ip, 8728);
connection = (Stream)con.GetStream();
}
public void Close()
{
connection.Close();
con.Close();
}
public bool Login(string username, string password)
{
Send("/login", true);
string hash = Read()[1].Substring(5,32);
Send("/login");
Send("=name=" + username);
Send("=response=00" + EncodePassword(password, hash), true);
if (Read()[0] == "!done")
{
return true;
}
else
{
return false;
}
}
public void Send(string co)
{
byte[] bajty = Encoding.ASCII.GetBytes(co.ToCharArray());
byte[] velikost = EncodeLength(bajty.Length);
connection.Write(velikost, 0, velikost.Length);
connection.Write(bajty, 0, bajty.Length);
}
public void Send(string co, bool endsentence)
{
byte[] bajty = Encoding.ASCII.GetBytes(co.ToCharArray());
byte[] velikost = EncodeLength(bajty.Length);
connection.Write(velikost, 0, velikost.Length);
connection.Write(bajty, 0, bajty.Length);
connection.WriteByte(0);
}
public List<string> Read()
{
List<string> returnValue = new List<string>();
string o = "", p = "";
byte[] tmp = new byte[4];
long count;
while (true)
{
if (p != "")
{
returnValue.Add(p);
p = "";
}
tmp[3] = (byte)connection.ReadByte();
//if(tmp[3] == 220) tmp[3] = (byte)connection.ReadByte(); it sometimes happend to me that
//mikrotik send 220 as some kind of "bonus" between words, this fixed things, not sure about it though
if (tmp[3] == 0)
{
if (o.Substring(0, 5) == "!done")
{
break;
}
else
{
o = "";
continue;
}
}
else
{
if (tmp[3] < 0x80)
{
count = tmp[3];
}
else
{
if (tmp[3] < 0xC0)
{
int tmpi = BitConverter.ToInt32(new byte[] { (byte)connection.ReadByte(), tmp[3], 0, 0 }, 0);
count = tmpi ^ 0x8000;
}
else
{
if (tmp[3] < 0xE0)
{
tmp[2] = (byte)connection.ReadByte();
int tmpi = BitConverter.ToInt32(new byte[] { (byte)connection.ReadByte(), tmp[2], tmp[3], 0 }, 0);
count = tmpi ^ 0xC00000;
}
else
{
if (tmp[3] < 0xF0)
{
tmp[2] = (byte)connection.ReadByte();
tmp[1] = (byte)connection.ReadByte();
int tmpi = BitConverter.ToInt32(new byte[] { (byte)connection.ReadByte(), tmp[1], tmp[2], tmp[3] }, 0);
count = tmpi ^ 0xE0000000;
}
else
{
if (tmp[3] == 0xF0)
{
tmp[3] = (byte)connection.ReadByte();
tmp[2] = (byte)connection.ReadByte();
tmp[1] = (byte)connection.ReadByte();
tmp[0] = (byte)connection.ReadByte();
count = BitConverter.ToInt32(tmp, 0);
}
else
{
//Error in packet reception, unknown length
break;
}
}
}
}
}
}
for (int i = 0; i < count; i++)
{
p += (Char)connection.ReadByte();
}
o += p;
}
return returnValue;
}
byte[] EncodeLength(int delka)
{
if (delka < 0x80)
{
byte[] tmp = BitConverter.GetBytes(delka);
return new byte[1] { tmp[0] };
}
if (delka < 0x4000)
{
byte[] tmp = BitConverter.GetBytes(delka | 0x8000);
return new byte[2] { tmp[1], tmp[0] };
}
if (delka < 0x200000)
{
byte[] tmp = BitConverter.GetBytes(delka | 0xC00000);
return new byte[3] { tmp[2], tmp[1], tmp[0] };
}
if (delka < 0x10000000)
{
byte[] tmp = BitConverter.GetBytes(delka | 0xE0000000);
return new byte[4] { tmp[3], tmp[2], tmp[1], tmp[0] };
}
else
{
byte[] tmp = BitConverter.GetBytes(delka);
return new byte[5] { 0xF0, tmp[3], tmp[2], tmp[1], tmp[0] };
}
}
public string EncodePassword(string Password, string hash)
{
byte[] hash_byte = new byte[hash.Length / 2];
for (int i = 0; i <= hash.Length - 2; i += 2)
{
hash_byte[i / 2] = Byte.Parse(hash.Substring(i, 2), System.Globalization.NumberStyles.HexNumber);
}
byte[] heslo = new byte[1 + Password.Length + hash_byte.Length];
heslo[0] = 0;
Encoding.ASCII.GetBytes(Password.ToCharArray()).CopyTo(heslo, 1);
hash_byte.CopyTo(heslo, 1 + Password.Length);
Byte[] hotovo;
System.Security.Cryptography.MD5 md5;
md5 = new System.Security.Cryptography.MD5CryptoServiceProvider();
hotovo = md5.ComputeHash(heslo);
//Convert encoded bytes back to a 'readable' string
string navrat = "";
foreach (byte h in hotovo)
{
navrat += h.ToString("x2");
}
return navrat;
}
}
}