You receive the error message "The Local Policy of this system does not permit you to logon interactively" when attempting to login to a limited user account from an NComputing terminal.
Due to changes made in Microsoft Windows XP Service Pack 3, standard limited user accounts may not be able to log in from NComputing terminals.
To correct this issue, first log in as an administrator on the NComputing host
NOTE: Due to limited features within the Windows XP Home operating system, this fix applies only to Windows XP Pro.
Click Start and then click Run.
Type in "gpedit.msc"
When the Group Policy Object Editor appears, navigate to:
Computer Configuration > Windows Settings > Security Settings > Local Policies > User Rights Assignment
In the right-hand panel, locate the entry named "Allow Log on through Terminal Services" and double-click on it.
On the new dialog box, click "Add User or Group.."
Type "everyone" into the available text box and click "Check Names"
After the name is underlined, click OK
Click OK on the "Allow Log on through Terminal Services" window.
You should now be able to log in successfully on the NComputing terminals with any local or domain user account.