RDP problem: Network Level Authentication is not supported on the client?? client=Windows 2007, host=Windows 2008 Server R2

Hi Everyone.

I've just set up a win2008 server cloud at rackspace, very impressed FYI. Anyway I can connect from my Windows 2007 machine via Remote Desktop Connection to the Win2008ServerR2 machine fine using the default settings. However, when I enable "Use Network Level Authentication" (NLA) on the Win2008ServerR2 box, and use RDP to connect from Win2007 I get an error (on the client side) along the lines of "Your machine does not support Network Level Authentication" - now I know the RDP client I am using supports NLA, so any ideas about what is going on? Presumably its a setting somewhere I am missing, but all the documentation says that simply enabling NLA on the host should work if the RDP client supports NLA, which win2007 does.

Thanks in advance.

Mondo

EDIT: The exact error message (on the Win2007 client) is "The remote computer requires Network Level Authentication, which your computer does not support."