The Bug Report

Microsoft Corp.: Windows users are advised not to install Windows 2000 Service Pack 1 immediately after installing Windows 2000 High Encryption Pack. Doing so may cause Windows 2000 to hang at the "Preparing Network Connections" message the next time users restart their computers. In order to prevent this from happening, computers should be restarted between the two installations. If it is too late and the computer is hung up, the problem can be fixed by following the steps outlined at support.microsoft.com/support/kb/articles/Q270/8/42.asp.

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