This error only appear on workstation running Windows XP with SP3. (Earlier version of SP did not cause this problem). You just need to turn on CredSSP at the registry.
Follow this step by step instruction:-
1. Click Start, click Run, type regedit, and then press ENTER.
2. In the navigation pane, locate and then click the following registry subkey:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa
3. In the details pane, right-click Security Packages, and then click Modify.
4. In the Value data box, type tspkg. Leave any data that is specific to other SSPs, and then click OK.
5. In the navigation pane, locate and then click the following registry subkey:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\SecurityProviders
6. In the details pane, right-click SecurityProviders, and then click Modify.
7. In the Value data box, type credssp.dll. Leave any data that is specific to other SSPs, and then click OK.
8. Exit Registry Editor.
9. Restart the computer.
Lastly, if you encounter some error message "cannot resolve -VM computer name-", make sure that DNS and WINS is properly register. That should do the trick and solve your problem.
