“Your credentials did not work. Your system administrator does not allow the use of saved credentials to log on to the remote computer because its identity is not fully verified”

You get the above error when attempting to connect via RDP to a 2008 terminal server session, you are then able to connect using the same password typed in manually no matter how many times you try saving the correct password for the RDP connection.

One would probably get frustrated having to enter the password for a zillion rdp connections as Win 7 is not using the saved credentials. To get around this:

1. Click on Start, and then in the search bar type: gpedit.msc
2. Expand Computer Configuration, Expand Administrative Templates, Expand System, Expand Credentials Delegation
3. Double Click on “Allow Delegating Default Credentials with NTLM-only Server Authentication“. Click the “Show…” button, Enter the following: TERMSRV/*
4. Click OK, to close the Show Contents Window, Click OK again to close the next window.
5. Double Click on “Allow Delegating Saved Credentials with NTLM-only Server Authentication“. Click the “Show…” button, Enter the following: TERMSRV/*
6. Click OK, to close the Show Contents Window, Click OK again to close the next window.
7. Click on Start, and then in the search bar type: GPUPDATE /FORCE

You should now be able to save the password for the RDP connection.