Troubleshooting NLA Authentication Failure in RDP: Domain Credentials Require Local Login First


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This week I hit a bizarre RDP limitation where Network Level Authentication (NLA) would consistently fail with error 0x00000709 until performing a local login. Here's what my debug session revealed:

Event Viewer Log (RemotePC/Security):
AUDIT_FAILURE 4625 
Status: 0xC000006D 
SubStatus: 0xC000006A 
LogonType: 3 
AuthenticationPackage: Negotiate

The key insight came from comparing credential behavior:

  • First attempt: CredSSP tries to authenticate against domain controllers
  • After local login: Cached credentials become available in LSASS

This explains why tools like klist show different results before/after local login:

C:\> klist tickets
Current LogonId is 0:0xdeadbeef
Error calling API LsaEnumerateTickets: 0x00000000

Adding this registry value forces credential caching at shutdown:

Windows Registry Editor Version 5.00

[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Winlogon]
"CachePrimaryDomain"=dword:00000001
"KeepRasConnections"=dword:00000001

Use this to verify credential delegation before RDP attempts:

function Test-RDPAuth {
    param([string]$ComputerName)
    
    $cred = Get-Credential
    $session = New-PSSession -ComputerName $ComputerName -Credential $cred -Authentication Negotiate
    
    if($session) {
        Write-Host "Authentication successful" -ForegroundColor Green
        Remove-PSSession $session
        return $true
    }
    else {
        Write-Host "Authentication failed" -ForegroundColor Red
        return $false
    }
}

For domain-joined systems, verify these policies:

  • Computer Configuration > Policies > Windows Settings > Security Settings > Local Policies > Security Options:
    • "Network access: Do not allow storage of passwords" = Disabled
    • "Interactive logon: Number of previous logons to cache" = > 1

When dealing with Remote Desktop Protocol (RDP) sessions using Network Level Authentication (NLA), we occasionally encounter a peculiar scenario where authentication only succeeds after performing a local login first. Here's the technical breakdown:

// Typical RDP connection sequence with NLA
1. Client initiates connection to target:3389
2. Server responds with supported protocols (CredSSP/TLS)
3. Client sends encrypted credentials via CredSSP
4. Server validates credentials against security package
5. Session established (or fails with encryption oracle error)

The issue stems from Windows security policies regarding Credential Security Support Provider (CredSSP) encryption. When a machine has been powered off or disconnected from the domain for extended periods, the cryptographic material becomes stale.

Key factors contributing to this behavior:

  • Kerberos ticket expiration (default 10 hours)
  • Cached credential encryption state mismatch
  • Group Policy updating delays
  • TPM-based key protection cycles

Instead of disabling NLA (which would be a security downgrade), consider these proper fixes:

# PowerShell script to reset CredSSP state
Set-ItemProperty -Path "HKLM:\Software\Microsoft\Windows\CurrentVersion\Policies\System\CredSSP\Parameters" -Name "AllowEncryptionOracle" -Value 0 -Type DWord
Restart-Service -Name TermService -Force

For domain-joined systems, push these Group Policy settings:

Computer Configuration > Administrative Templates > System > Credentials Delegation
- Set "Encryption Oracle Remediation" to "Enabled: Vulnerable"
- Set "Allow Default Credentials with NTLM-only Server Authentication" to "Enabled"

If immediate GPO deployment isn't feasible, try these temporary solutions:

  1. Schedule a daily reboot task: 
    schtasks /create /tn "Pre-RDP Reboot" /tr "shutdown /r /f" /sc daily /st 03:00
  2. Implement a pre-connection script: 
    # Pre-connection validation script
Test-NetConnection -ComputerName TARGET -Port 3389
if ($LASTEXITCODE -ne 0) {
    Start-Process -FilePath "psexec.exe" -ArgumentList @("\\TARGET", "-u", "DOMAIN\user", "-p", "password", "cmd", "/c", "logoff")
}

When the issue persists, collect these diagnostic artifacts:

  • Client-side Event Viewer logs: Applications and Services Logs > Microsoft > Windows > TerminalServices-ClientActiveXCore
  • Server-side security audits: Security log with Event ID 4624 (successful logon) and 4625 (failed logon)
  • Network traces showing CredSSP negotiation: 
    netsh trace start scenario=NetConnection capture=yes tracefile=C:\temp\rdp.etl
# Reproduce issue
netsh trace stop