SQL Server Native Client 10.0 SQL Server Network Interfaces: The target principal name is incorrect

This is due to the integrated security, and it is a problem w/the kerberos delegation of the SPN over tcp/ip.  This is a good reference for the problem, and resolution:
http://support.microsoft.com/kb/811889

I ran "setspn.exe -L sqladmin\domain user account" and the results show that nothing is registred with that account. But i know that i have 3 sql servers using that account to run sql server services & agent services.

Is the lack of SPN under the domain user account the problem here?

I believe the SPN should be registered to the sql server service account:  http://technet.microsoft.com/en-us/library/bb735885.aspx
We had a very similar problem not long ago, and I resolved it after having referenced this:  http://blogs.msdn.com/b/sql_protocols/archive/2005/10/12/479871.aspx


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To verify that Kerberos authentication is being used, you may query the sys.dm_exec_connections DMV and look under the auth_scheme column, e.g.
 select auth_scheme from sys.dm_exec_connections where session_id=@@spid
 If Kerberos is being used, then it will display “KERBEROS”.
 I should also mention that if the instance automatically registered an SPN at startup, then it will unregister it when the instance is stopped.
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Right now my sql services spn is pointed to different account and not the account that is being used as the service account for sql services. I would have to de-register that account and re-register the spn to the account that I'm using for the sql service. Am I understand this correctly?

I ran the select auth_scheme from sys.dm_exec_connections where session_id=@@spid
 on my sql server and I get NTLM and not kerebos

That is precisely what I receiced a couple weeks back, same problem with the kerberos resolution. Once the spn was corrected, we were good.  If I remember correctly,I did have to restart the agent.

- So I will have to de-register the current spn on the target sql server.
- re-register the spn to the logon account I have for the sql services on the target server

- Do i have to do this on the client side as well (where ssms is ) or is this only for the target server

Just the server.

great let me try it

it worked but it still shows up as NTLM and not kereobs

I am on my blackberry right now, so I can't really do much. I don't remember how long after our change that I checked that it wasn't NTLM anymore, but this effort did resolve our failure.

Does the SSPI error persist?

the sspi error is gone but I thought it should have changed to kerebos

Great answers, really resolved my problem

Excellent!  Glad to have helped.