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Configuration Manager 2007 and later versions will not be able to configure WSUS in a network load balanced configuration when the WSUS\SUP nodes are running on Windows Server 2008. The WCM log will contain the following message:
System.Net.WebException: The request failed with HTTP status 401: Unauthorized.
To resolve this issue using the following steps to turn off Kernel-Mode authentication which is new and on by default in IIS 7.
1. Go to the Default Web Site (or other web site if you are not using the default)
2. Select ApiRemoting30
3. Double click Authentication (in the right pane)
4. Right click windows authentication
5. Advanced Settings
6. Clear the check box for Enable Kernel-Mode authentication
7. Repeat for each server in the NLB Cluster
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