When starting an App-V application on a client, a popup is shown asking for credentials (username and password).
If the credentials are entered, the application still doesn’t start.
A Windows update on the SCCM Distribution Point, specifically the kb2868623 update.
Configure the website on the SCCM Distribution Point to Anonymous Authentication.
Uninstall the update from the SCCM Distribution Point and reboot the server.
I’ve encountered this issue on the following environment:
Client: Windows XP
SCCM: 2007 R2
Server: Window Server 2008 R2 (with and without SP1)