"Login Failed" message on desktop when using autodiscover mode

Seen this issue bouncing around a while now. I contributed to another thread on this but was in iPhone threads.....So.....

2 machines connected to same router. One can log in using gmail creds and I can access it from my HTC Desire no problem. Other machine give "Login failed" message. Not a router/proxy issue as both machines hang off same router....is there a setting somewhere on the machine that I am missing. used the Pocketcloud diagnostic and it says ports etc all check out.

Thanks for any advice.