Logon Failure: Reason: An error occurred during logon

This issue occurs if you install Microsoft Windows XP Service Pack 2 (SP2) or Microsoft 


Windows Server 2003 Service Pack 1 (SP1). Windows XP SP2 and Windows Server 2003 SP1 


include a loopback check security feature that is designed to help prevent reflection attacks 


on your computer. 


Therefore, authentication fails if the FQDN or the custom host header that you use does not 
match the local computer name.

Method 1: Specify host names (Preferred method if NTLM authentication is desired)

To specify the host names that are mapped to the loopback address and can connect to Web sites on your computer, follow these steps:

1. Set the
   DisableStrictNameChecking
   registry entry to 1. For more information about how to do this, click the following article number to view the article in the Microsoft Knowledge Base:
   281308  Connecting to SMB share on a Windows 2000-based computer or a Windows Server 2003-based computer may not work with an alias name
2. Click Start, click Run, type regedit, and then click OK.
3. In Registry Editor, locate and then click the following registry key:
   HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa\MSV1_0
4. Right-click MSV1_0, point to New, and then click Multi-String Value.
5. Type BackConnectionHostNames, and then press ENTER.
6. Right-click BackConnectionHostNames, and then click Modify.
7. In the Value data box, type the host name or the host names for the sites that are on the local computer, and then click OK.
8. Quit Registry Editor, and then restart the IISAdmin service.

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Method 2: Disable the loopback check (less-recommended method)

The second method is to disable the loopback check by setting the DisableLoopbackCheck registry key.

To set the DisableLoopbackCheck registry key, follow these steps:

1. Set the
   DisableStrictNameChecking
   registry entry to 1. For more information about how to do this, click the following article number to view the article in the Microsoft Knowledge Base:
   281308  Connecting to SMB share on a Windows 2000-based computer or a Windows Server 2003-based computer may not work with an alias name
2. Click Start, click Run, type regedit, and then click OK.
3. In Registry Editor, locate and then click the following registry key:
   HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa
4. Right-click Lsa, point to New, and then click DWORD Value.
5. Type DisableLoopbackCheck, and then press ENTER.
6. Right-click DisableLoopbackCheck, and then click Modify.
7. In the Value data box, type 1, and then click OK.
8. Quit Registry Editor, and then restart your computer.

(http://support.microsoft.com/kb/896861)