Unable to use vSphere Client 4.1 with 'Use Windows session credentials'

We have VMware VirtualCenter Server installed on one of our physical servers. I am trying to use the vSphere client 4.1 (also installed on this server) to connect to localhost and using the option of 'Use Windows session credentials'.

This is failing though, the strange thing is if I manually enter the same Windows session credentials it allows me in. Ive checked within Administrator once logged in and my user account has server access so I cant understand this.

All I want to be able to do this click 'Use Windows session credentials'. and then logon to V server.

Would really appreciate any advise on this.

Thanks

Ed