After seeing this error code in my smsts.log during the step “Install Software Updates” during OSD for no apparent reason, I searched the web for a solution with almost no result.
All I could find were suggestions to reinstall the WSUS and/or the SUP and other thredes that didn’t really match my error to 100%.
This error occurs only on clients in untrusted domains, a workgroups are essentialy untrusted domains, thus making my build and capture TS fail.
Then what is the solution to the problem? Well, it’s as easy as adding a Hotfix to your Task sequence before applications or updates are installed.
The hotfix is described in KB2522623, found here, and is called “InitializeSecurityContext function might not fall back to NTLM authentication in Windows 7 or in Windows Server 2008 R2 when Kerberos fails and has the STATUS_NO_LOGON_SERVERS status”
Create an ordinary package containg the msu file and install it before applications or software updates are to be installed. (Example from my Build and Capture TS)
This won’t solve all issues regarding deployment of applications and software updates in Configuration Manager 2012, but it will solve the “access denied” error when deploying to Windows 7 clients in untrusted domains.