I've just installed UltraVNC version 126.96.36.199.2 on a Win 7 desktop machine, and also on a Win 2008 R2 server. I've configured them both for single domain MS Login.
Whichever way I try to connect (desktop -> server or server -> desktop), the connection is made, but then immediately says "Server closed connection -The server running as application" (which it's not- the server is running as a Windows Service under the Local System account on both machines.)
I've googled this issue and found a few suggestions on the forums, but they didn't seem to help.
Looking at the application logs, I'm seeing a an exception c0000005 in SAMCLI.dll being called from WinVNC whenever I'm attempting to logon. I'm sure that's the problem, but I have no idea what the source of the exception is, nor what to do about it. (This does appear to be related to the Windows Login authentication - it will work if I turn Windows Login off and just rely on VNC login.)