Enabling Network Level Authentication on Windows XP Service Pack 3 for access to Server 2008 via Remote Desktop

When connecting to a Windows 2008 Server using remote desktop from a Windows XP client running service pack 2 or earlier, you get the following error message:

The remote computer requires Network Level Authentication, which your computer does not support.

To enable NLA in XP machines; first install XP SP3, then edit the registry settings on the XP client machine to allow NLA