Network Access Denied Error due to Incompatible LAN Manager Authentication Level

Receive the below error message when trying to access Network shares via UNC connection \\server or Network Printers;
It also affects the Login Authentication via Web.

Event Log ID: 529
Error message: Unknown user name or bad password

 All servers and workstations joined to the Engineering Domain has been enforced with NTLMv2 only Authentication; therefore if any machine that is not configured to the same authentication level will not have access to Network resources such as files sharing and printers sharing.

 http://support.microsoft.com/kb/823659

 Please see above article for reasons to enforce NTLMv2 authentication level

 Instruction to configuring NTLMv2 authentication on your Windows machine (2 methods):

Method 1 (Recommended)

• By Local Security Policy           (Windows 2000/XP or Windows Server 2003)
  • Logon as an Administrator
  • Control Panel >> Administrative Tools >> Local Security Policy
    • Expand Local Policies >> Security Options
      • Find this entry à Network security: LAN Manager authentication level
        • Double click it >> scroll down to select Send NTLMv2 response only \ refuse LM & NTLM
        • OK (You must do this to fix the error)
        • Reboot computer
      • Recommended settings
        • Network security: Do not store LAN Manager hash value on next password change: enabled
        • Network Access: Do not allow anonymous enumeration of SAM accounts: Enabled
        • Network Access: Do not allow anonymous enumeration of SAM accounts and shares: Enabled

Method 2

• By editing the Registry Keys manually   (Windows NT/98/ME/2000/XP/2003)
  • Logon as an Administrator
  • Start >> Run >> REGEDIT
  • Expand >> HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa\LmCompatibilityLevel
    • Modify the value of LmCompatibilityLevel REG_DWORD
    • Set it to 5 in Hexadecimal
    • Reboot computer

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