Network Level Authentication (NLA) error when trying to RDP into a VM

After spending several hours, reading many Microsoft Azure Support Articles, many Stack Overflows, many many trial and errors, and finally an article by Okan Ozbey, I decided to share my simplified resolution.

Sparing the details to keep this short and sweet, it all started with the idea of provisioning a new environment by "restoring" allegedly "sysprep"ped images in Azure.

The source VM's were joined to a non-prod domain, to which the the target environment has no connectivity. After the successful restore, when we try to login to the VM using your local admin account, we get the dreaded error message. And the spinning starts...

Azure has a beautiful feature called "Run Command". It is a life-saver.

Go to the portal, select your VM. In your VM blade inside the "Operations" section you will find the "Run Command" button. Click it. You will see the available commands, and if you look close enough, you will see the "DisableNLA" command. Execute the command, and wait patiently until you see below in the output:

 Configuring registry to disable Network Level Authentication (NLA).
Restart the VM for the change to take effect.

And restart the VM...

Now you can get into the machine and resolve your issues. NLA is a beautiful thing. It should be enabled. Research it if you don't believe me. The more secure, the better. Doesn't cost you a dime... Well, time is worth a lot of money, so this is not entirely true. But, it is worth it. So after you fix your issues that prevents you from using NLA, re-enable it. It is for your own protection.

Anyways, hope this helps other people to save some time - and money.

Happy Clouding