This problem tends to occur when using
Windows 98 or Windows ME. This can be resolved by following
these steps:
Recreate the Dial Up Connection
as described
here.
Windows 95/98 - This error can
occur if the Require encrypted password option is
enabled on the Server Types tab in the connection's
properties, or an incorrect user name or password have
been entered. See
MS KB Article Q199780
All versions of Windows - This
error can occur if you are attempting to connect to a
Windows 2000 domain that has had a RRAS (Routing and
Remote Access Services) server log on without
administrative privileges. See
MS KB Article 227747