Remote Desktop 6.0 for Windows XP cannot use Network Level Authentication
A few months ago Microsoft released an update to the Remote Desktop client that, among other things, added compatibility with Vista. I’ve just recently had the chance to try this out, and it’s pretty neat - it looks better, and seems to perform better too. I did hit one snag though. When I enabled Remote Desktop on my Vista machine, I checked the box that said only clients using Network Level Authentication (NLA) could connect. I thought this would work, since the release notes for the new Remote Desktop client said that it supported NLA. However, upon connecting from my XP laptop, I got this:
“The remote computer requires Network Level Authentication, which your computer does not support. For assistance, contact your system administrator or technical support.”
I did a little research, and here’s the deal. NLA simply isn’t available on XP (or at least, isn’t installed as a part of the new Remote Desktop). So to connect to Vista from your XP machines, you’ll need to uncheck the “requires NLA” box in Vista. After that it’s smooth sailing.

April 8th, 2007 at 8:07 am
Yeah I’m testing this application publishing with Longhor Terminal Server and I ran into the same issue with Windows XP. I will give it a shot with my Vista PC and see oif it works.
Good info :)
April 11th, 2007 at 11:31 pm
Hey man great info. Hopefully NLA will come to XP soon.
November 5th, 2007 at 2:21 pm
http://blogs.msdn.com/ts/archive/2007/01/22/vista-remote-desktop-connection-authentication-faq.aspx
foung this resource that backs up what you’ve said - thanks for the post and the dialog pictures alongside
August 17th, 2008 at 9:16 pm
looks like you need to enable CredSSP on winxp SP3 in order to get NLA working.
November 7th, 2008 at 11:46 am
I am using an XP Pro running on Intel CPU DUO Core 2, also get the same error when connecting to an older XP Pro running on Intel Pentium 4 CPU.
However, when it is connecting to a remote 2003 server, this problem does not exist.