RDP not working from Windows Vista or Windows 7

[kihjin]

VirtualBox: 3.0.4

Guest: Ubuntu Server 10.04 64Bit
Host: Ubuntu Server 8.04.3 64Bit

Problem: When connecting to the Guest via RDP on Windows Vista and Windows 7, the connection fails. When connecting from Linux (via rdesktop) or Windows XP, the connection succeeds.

On windows vista, it hangs...
On windows 7, occasionally errors with "low virtual memory" or hangs at "Configuring remote session...."

VBox.log:

03:30:05.404 VRDPAUTH: external authentication module returned 'access denied'
03:30:05.404 VRDPAUTH: Access denied.
03:30:05.404 VRDP: Connection closed:
03:30:05.404 VRDP: Logoff: xxxxxx (10.0.0.12) build 7600. User: [ruby] Domain: [] Reason 0x0001.

The log shows that the user connects with the correct username. So, either the password is incorrect, or not specified at all. Windows 7 is not prompting for a password. Instead, it errors that the system "might be low on virtual memory." No other programs are running, 4GB of system memory. This is happening from Windows Vista too. Windows XP works fine.

/var/log/messages.log displays the following:

pam_pwdfile[3772]: password too short or NULL

This clearly isn't Virtualbox, but a windows vista and windows 7 issue. How do I get Windows Vista+ to ask for a password like it does in Windows XP?

[kv1]

FTR....
Looks like the Win7 RDP client's "You will be prompted for Credentials" works by providing empty password first; PAM or whatever sees this as an error and reports back to VBox which terms the connection.

If you click the "Allow me to save credentials," you should get the passwd box, which allows you to pre-auth.