You cannot start a VPN connection that uses CHAP or PAP authentication to a computer that is running Windows Vista or Windows Server 2008
Consider the following scenario:
- You have a computer that is running Windows Vista or Windows Server 2008.
- You create a new incoming connection by using static IP addresses from the static IP address pool.
- You use only one of the following authentication protocols as the authentication for the incoming connection:
- Challenge Handshake Authentication Protocol (CHAP)
- Password Authentication Protocol (PAP)
In this scenario, you cannot start a virtual private network (VPN) connection to this computer from a client computer that is running Windows XP, Windows Server 2003, or Windows Vista.
For more information on this issue, including potential causes, workarounds, and resolutions, see: Microsoft KB Article KB977656.