Virtual Machine Manager cannot process the request because an error occurred while authenticating SRV-SCVMM-01.water.intern. Possible causes are:
1) The specified user name or password are not valid.
2) The Service Principal Name (SPN) for the remote computer name and port does not exist.
3) The client and remote computers are in different domains and there is not a two-way full trust between the two domains. Log in by using an account on the same domain as the VMM server, or by using an account on a domain that has a two-way full trust with the domain of the VMM server, and then try the operation again. If this does not work, purge the Kerberos tickets on the VMM server by using kerbtray.exe, available at http://go.microsoft.com/fwlink/?LinkId=93709. Then, reset the SPN for SRV-SCVMM-01.water.intern by using setspn.exe available from http://go.microsoft.com/fwlink/?LinkId=93710. If this still does not fix the problem, make SRV-SCVMM-01.water.intern a member of a workgroup instead of a domain, restart the computer, rejoin the domain, and then try the operation again.
ID: 2917. Details: The network path was not found (0x80070035)
After following the instructions at both links, the problem still remained. Also, I was able to reproduce this issue flawlessly.
We found the solution, after 2 days of frustrating, in the naming convention of the server!
It seems that a name like “SRV-SCVMM-01” will result in the error, but “SRV-SCVMM” or “SCVMM” works just fine.
Lesson learned: When installing SCVMM, don’t use more then 1 dash in you server name!
I hope Microsoft reads this and will fix it in SCVMM 2008 R2 SP2