Server 2008, Vista and Windows 7 have some additional security features for Remote Desktop connection called Network Level Authentication.  
Unfortunately if you’re still running Windows XP SP3 these additional features are not enabled by default and you might get the following error:

“The remote computer requires Network Level Authentication, which your computer does not support.  For assistance, contact your system administrator or technical support.”

Fortunately there is a simple fix to the problem.   Follow the steps below and you will be able to connect to the server again with the higher security settings:

To enable NLA in XP machines, you need to first make sure you have installed XP SP3, then edit the registry settings on the XP client machine to allow NLA authentication by doing 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: HKEY_LOCAL_MACHINESYSTEMCurrentControlSetControlLsa

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_MACHINESYSTEMCurrentControlSetControlSecurityProviders

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.