If you have Mac OS X Server and are running a VPN daemon, enter the following the settings on the Windows XP client:

General Tab:
put your server’s address of resolvable name (vpn.yourserver.com)

Security Tab>Advanced>Settings…:
Require encryption ()disconnect if server declines
Microsoft CHAP Version 2 – only thing that should be checked

Security Tab:
IPSec Settings…:
Your share secret – the one you put in the Mac OS X server VPN

Networking Tab:
Choose “L2TP IPSec VPN”