When you configured remote desktop on the Win7 machine, did you click the select users button and make sure that the user that you are attempting to connect as, is included as an allowed user for remote desktop sessions. You may even want to try, right clicking on computer and choose manage, in the left pane and expand local users and groups, select groups, double click Remote Desktop Users, make sure your user is in there or else, click add, click advance, click find now, scroll bottom pane if necessary to select the user account you are using and ok your way back out of there and see if that helps.
The only other thing I can think of is to open secpol.msc , select and expand Local Policies, select User Rights Assignment, check the right pane for account information in the Allow log on through Remote Desktop Services, edit as needed and Deny log on through Remote Desktop Services, edit as needed.
Just set mine up for remote desktop (Win7 Ultimate x64) walked over to my neighbors house and logged in with no problems from his XP machine. So I can't duplicate your issue, but I have seen other members with the same problem, so if you get it resolved please post back and let us know.