Cannot Use Direct Cable Connection Between Windows 2000 and Windows 95 or Windows 98 Host

When you use a direct cable connection from a guest computer that is running Windows 2000 to a host computer that is running either Windows 95 or Windows 98, you may receive the following error message: Regardless of the credentials that you enter, Windows 2000 prompts you twice for your username, password, and domain name, the connection is not made, and then you receive the following error message: If you do not use password protection and your user account is not a member of a domain, you still receive these error messages.

This issue can occur if you do not turn on support for earlier versions of MS-CHAP for Windows 95 servers on the Windows 2000 direct cable connection.

To resolve this issue, follow these steps:

1. On the computer running Windows 2000, right-click My Network Places, and then click Properties.
2. Right-click the direct cable connection, and then click Properties.
3. On the Security tab, click Advanced, and then click Settings.
4. Click to select the Allow older MS-CHAP version for Windows 95 Servers check box, click OK, and then click OK.
5. Close the "Network and Dial-up Connections" window.

Microsoft has confirmed that this is a problem in the Microsoft products that are listed at the beginning of this article.