It's been a while since I've been struggling with this issue, but now that I'm trying to backup VMs using SAN access directly (using vStorage API), I'm running into this issue again.

What I am trying to do: access any DSS target using Microsoft's native (Win 2k8 R2) iSCSI initiator.

Even without CHAP and any IP restrictions, I get "Authentication Failure", no matter on what IP or from what machine I try to connect.

DSS is listening on port 3260, and I have a VMWare ESX 4.1 connected to one of the targets.
The problem solely exists when using Microsoft Initiator.

I'm stumped - this should be easy. What am I overlooking here?
Are there any requirements for the Initiator name?

Please, help!