• OK guys, I've solved my mystery (and hopefully yours). As many others, I have been setting up a new machine from scratch. Given that I do not do that every day (but only when the PC dies due to a failure) I've forgotten a crucially important piece.
• Namely, when you set Windows 11 Pro up for the first time and use your Outlook.com ID, the OS also suggests you to create a PIN (which everyone does) during the initial setup process.
• BUT the important thing is, Windows 11 Pro immediately starts to use this PIN for logging in, so you actually NEVER log in with your password. As a result, neither RDP connections, nor drive share connections work, because both rely on using the password associated with the Outlook.com or Windows Live ID. And Windows does not allow this because you have never logged in using your password on this computer after installing or resetting the OS. (This is weird behavior, but that's how it works).
• To fix the situation, you do not need to reset the OS or do anything drastic. Just log off (screen lock or reboot) and TRY TO LOG IN USING YOUR PASSWORD, BYPASSING THE PIN. This process is somewhat counterintuitive, but as soon as you have got through the [rather quirky] login that uses your password for the first time since setting up the OS (just reject using your PIN or Windows Hello), both RDP and share access using your Outlook.com credentials start working.

[RESOLVED] Windows 11 25H2: Duplicate Machine SID Caused Authentication Failures on Non-Domain Joined Computers

I encountered this exact issue across multiple new Beelink systems running Windows 11 25H2. None of the machines were domain-joined, yet they could not authenticate to each other under any circumstances, even when using the correct local credentials.

A key cause is that some manufacturers ship systems using cloned OS images, which means every unit can come with the same Machine SID.
Windows might tolerate this in older builds — but Windows 11 25H2 will not.

Symptoms

On standalone (non-domain-joined) Windows 11 25H2 devices:

Accessing SMB file shares fails
Error: “The user name or password is incorrect.”

Remote Desktop (RDP) login fails, even with valid credentials

Remote local logons fail (e.g., using .\Administrator)

Event logs show authentication errors despite correct passwords

All affected systems were found to be using identical Machine SIDs, because they came from a manufacturer that deployed a cloned OS image

Why this happens

Windows 11 25H2 enforces Machine SID uniqueness much more strictly.
If two devices have the same Machine SID, Windows treats them as security clones, and cross-machine authentication is blocked.

This breaks:

SMB folder access

RDP authentication

Any remote use of local accounts

Credential validation between systems

Manufacturers that clone an OS image without sysprepping it first will produce devices that all share the same SID — and Windows 25H2 will refuse authentication between them.

Step 1 — Check for Duplicate Machine SIDs

Any admin account can run this.
Every Windows installation has a built-in Administrator account, so we use it to extract the Machine SID prefix.

Run in elevated PowerShell:

((Get-LocalUser -Name "Administrator").SID.Value -replace "-500$", "")

Compare the value across all affected machines.
If they match, the systems are using duplicated OS images with identical SIDs.

Step 2 — Fix It Using Sysprep

If duplicate SIDs are confirmed, regenerate a unique Machine SID using Sysprep.

Run this in an elevated command prompt or PowerShell:

C:\Windows\System32\Sysprep\Sysprep.exe /generalize /oobe /shutdown

What /generalize does:

Regenerates the Machine SID

Clears hardware-specific configuration

Resets activation timers

Removes restore points and event logs

Prepares the OS as a unique installation (correct practice before imaging)

After Sysprep completes, restart the machine and finish OOBE.
After that, SMB sharing, Remote Desktop, and credential authentication work normally.

Conclusion

If standalone Windows 11 25H2 systems cannot authenticate to each other despite the correct credentials, check for duplicate Machine SIDs. Many smaller manufacturers — including some Beelink batches — ship devices created from a cloned image without Sysprep, causing SID duplication.

Sysprepping the system with /generalize immediately resolves the issue.

If this helps anyone else running into the same problem, feel free to reply. Big Amens to ChatGPT for helping me figure this out.

I have the same problem. I can't access another computer on the local network with a shared folder windows 11. The password is incorrect for any login attempt. The password-protected shared access is disabled, but it still requires a password. What is this ? Why is this made ?T he internet is full of crooked fixes for this situation. Nothing works.

we did all troubleshooting,even we did all in newly formatted system

If you are experiencing issues with Windows 11 asking for credentials repeatedly when trying to share folders between two computers, here are some steps you can take to troubleshoot and potentially resolve the issue:

1. Check Network Sharing Settings: Ensure that file and printer sharing is enabled on both computers. You can do this by going to the Control Panel > Network and Sharing Center > Change advanced sharing settings. Make sure that Turn on file and printer sharing is selected.
2. Use the Correct Credentials: When prompted for credentials, ensure you are entering the correct username and password for the account that has access to the shared folder. If you are using a Microsoft account, try using the local account credentials instead.
3. Disable Password Protected Sharing: If you want to simplify access, you can disable password-protected sharing. This can be done in the Network and Sharing Center under Change advanced sharing settings. Look for the option to turn off password-protected sharing.
4. Map Network Drive Using IP Address: Instead of using the computer name, try mapping the network drive using the IP address of the computer that has the shared folder. This can sometimes bypass issues with name resolution.
5. Check Firewall Settings: Ensure that the firewall on both computers is not blocking file sharing. You may need to allow file and printer sharing through the firewall settings.
6. Reset Network Settings: If the issue persists, consider resetting the network settings on both computers. This can be done in Settings > Network & Internet > Status > Network reset.
7. Update Windows: Ensure both computers are running the latest updates for Windows 11, as updates can sometimes resolve connectivity issues.

If you have tried all these steps and are still facing issues, you may want to consult additional resources or support for more specific troubleshooting steps.

References:

• The network folder specified is currently mapped using a different user name and password error
• Error when you try to access an administrative share on a Windows-based computer from another Windows-based computer that's a member of a workgroup: Logon unsuccessful: Windows is unable to log you on