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From the author of Configuring the IPsec Settings in Windows

Configuring the IPsec Settings in Windows

You must also configure the IPsec settings in Windows XP before connecting:

  1. Click Start > Run, type mmc, and press Enter.
  2. Add the IP Security Policy Management snap-in by clicking File > Add/Remove Snap in.
  3. On the window of the newly added snap-in, select Action > Create IP Security Policy.
  4. On the wizard, click Next to continue.
  5. Click Next to accept the default name.
  6. Uncheck the Activate the default response rule and click Next.
  7. Make sure the Edit Properties option is checked and click Finish.

Then starting with the properties window that popped up, follow these steps:

  1. Click Add.
  2. On the wizard, click Next.
  3. Make sure that the This Rule Does Not Specify A Tunnel option is marked and click Next.
  4. Select the Local Area Network option and click Next.
  5. Select Use This String To Protect The Key Exchange, type the same pre-shared key you created on RouterOS, and click Next.
  6. Click Add to create a new IP Filter List.
  7. Click Add and follow the wizard, selecting My IP Address as the Source and the IP address of the RouterOS as the Destination.
  8. On the window for the new IP Filter List, click OK.
  9. Select the new IP Filter List you just created from the list and click Next.
  10. Select Require Security and click Next.
  11. Uncheck the Properties option and click Finish.

Now you need to bring up the Services snap-in on the Console so you can restart the IPSec service. Then go back to the IP Security Policy snap-in, right-click the new policy and select Assign. Finally, you should be able to connect to the VPN.

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