VPN That Uses MS-CHAP Authentication Does Not Connect to RRAS Server

When you create a virtual private network (VPN) connectoid to the IP address of an RRAS server that has Microsoft Challenge-Handshake Authentication Protocol (MS-CHAP) authentication enabled, the VPN may not work.

This behavior occurs if you turn on the Store password using reversible encryption setting in the Local Computer Policy snap-in for Microsoft Management Console (MMC) and you also configure the advanced settings on the Security tab of the VPN connection as follows:

• In the Data encryption box, click No encryption allowed.
• In the Logon security box, click Use Extensible Authentication, and click MD5-Challenge from the drop-down box.

To resolve this problem, obtain the latest service pack for Windows 2000. For additional information, click the following article number to view the article in the Microsoft Knowledge Base:

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

This problem was first corrected in Windows 2000 Service Pack 2.