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When trying to connect to the ArcGIS server using ArcCatalog the following error message is received: "Error: a security package specific error occurred".
This occurs when the client machine is a Windows XP machine and all domain servers are Windows Server 2008 or Windows Server 2008 R2 machines and are set to Active Directory level 3 native mode.
This is a result of how DCOM is handled in Windows Server 2008 and Windows Server 2008 R2.
For additional information see the Microsoft article:
How to raise Active Directory domain and forest functional levels
There are currently three options available with a fourth option to be available in 2012.
• Upgrade the client machine to Windows 7 (contact your IT administrator).
• Downgrade a server to Windows 2003 (contact your IT administrator).
• Apply fix from Microsoft available in MSDN technical article 99642.
• Upgrade to ArcGIS 10.1 (available in 2012).