Error in data encryption - tried everything - am stumped

I keep getting the "Because of an error in data encryption, this session will
end. Please try connecting to the remote computer again" error with Remote
Desktop when connecting from my laptop (Vista) to my desktop (WIN XP). I do
not get this error when connecting from the Desktop to the Laptop, which
works fine, but defeats the purpose since I can't exactly sit on my couch
with the desktop....

This used to work before and worked for a year since I set it up, but
because I was running out of partition space on the laptop amongst other
issues, I decided to wipe it clean, reinstall the OS and all applications.
This tells me it's not an issue on the router since nothing has changed
there.

Here's what I have done so far:

1. I have verified that the NIC on the Desktop has the Large Send Offload
settings are disabled on the XP desktop machine.

2. I have already verified registry settings per KB article on both laptop
and desktop.
http://support.microsoft.com/default.aspx/kb/323497

3. I have disabled the firewall on both laptop and desktop. This didn't help
either. In either case, both systems have 3389 open.

4. The "allow connections from computers running any version of Remote
Desktop" is enabled on the Vista laptop.

I am able to connect from the desktop to the laptop but not the other way
around. I think this may have something to do with Vista SP1. Someone please
help!