As a follow up, it may have nothing to do with VSS..  RDS just doesn't work.  
My co-worker has ColdFusion Studio 5 and can't connect via RDS either and is 
prompted with the same error message "Unable to Authenticate.."  even though 
the ColdFusion 5 server is set to not require a password for RDS.

This is a windows 2k server, does anyone have any suggestions that would relate 
to IIS to ensure RDS will work?

- Rob

>We use this configuration regulary and it works fine for us so I
>reckon it must be your DWMX config.  Does RDS work through the
>browser?

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