"Principal Name for the VMRC Server" Error Message

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Since I primarily work disconnected from the domain, I occasionally have prolbems connecting to the Virtual Server 2005 R2 administration site on my machine. I can connect with the VMRC client, but I can't do much configuration from there. Here is the error message:

The service principal name for the VMRC server could not be registered. Automatic authentication will always use NTLM authentication. Error 0x8007054b - The specified domain either does not exist or could not be contacted.

 

Here is how I got around it. Basically choose to run the Virtual Server service as the Local System Account. This will compromise security a bit, but it works.