When setting up Remote Desktop in Windows 7 (Win7), you can choose whether to use Network Level Authentication (NLA) or not. NLA will probably enhance the security of your Win7 machine. However, after enabling NLA, your Win7 will be accessible only from another Win7 or Windows Server 2008 which supports NLA in the operating system level. To connect Win7 from WinXP, you should choose “Allow connections from computers running any version of Remote Desktop (less secure)” in the “Remote Desktop” panel, or you can activate NLA in case you are using WinXP sp3. The details are posted here, but the essence of the how-to is like the following.

1. Click Start, click Run, type regedit, and then press ENTER.
2. In the navigation pane, locate and then click the following registry subkey:
3. HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\LsaIn 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:
6. HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\SecurityProvidersIn 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.