AN Authentication Error has occured (0X507)

This error occured when you try to connect from your XP (SP 2 or 3) or Vista desktop to Windows 2008 TS. This is NLA error. WIndows 2008 use NLA for security reason. 

To solve this error you need to make registory changes. 

1. Click on Start and Click on RUN (if it is Vista type regedit in search)
2. Type Regedit and click OK
3. It will open registory editor
4. Click on HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa
5. In right hand panel right click on Security Packages and clcik Modify.
6. In box leave all value and add tspkg at end As new value. and click OK.Refer Image
7. Now click onHKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\SecurityProviders
8. In right hand side panel right click on Security Provider and click Modify
9. In data add word credssp.dll as new value. Do not change any other value
8. Click OK and exit from registery Editor
9. Restart your compute

If you are responsible for maintaining Windows Terminal Server in your environment then i strongly recommend to use "Windows Server 2008 Terminal Services Resource Kit" . This book is really very helpful.