Does Windows Authentication to SQL Server 2000 not work from within Windows 7 XP Mode?

Unable to log into SQL Server 2000 instance on a Windows 2003 server with Query Analyzer using Windows Authentication. Here is the error:

Unable to connect to server SERVER1\SQL2K

Msg 18452: Level 16, State 1 [Microsoft][ODBC Driver][SQL Server] Login failed for user '(null)'. Reason: Not associated with a trusted SQL Server connection.

From the error it seems XP Mode is not passing the 'security principal' to the SQL2K instance?

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